Ooh Media to raise $167m in equity and eyes savings of over $30m
Outdoor media company Ooh Media has announced it will undergo a fully underwritten equity raising round of $167m.
HMI Capital, a San Francisco-based private equity firm, is one of the companies involved in the exchange and its founder and managing partner Mick Hellman will join the Ooh Media board as a non-executive director. HMI has committed to sub-underwriting up to $17.7m, which could leave it with a quarter of the Ooh Media business, increasing its stake from 19% to 25%.
Outgoing Ooh Media CEO Brendon Cook will stay with the business until the end of 2020
Should the stake surpass 20%, it would need to be approved by the Foreign Investment Review Board (FIRB). It has also been announced that outgoing Ooh Media CEO Brendon Cook will now stay with the business until at least the end of 2020.
The capital-raising process is being managed by Macquarie Capital.
Ooh Media has also flagged a cost-saving plan of between $20 and $30m, with operating expenditure and rent savings the core. Operating expenditure can be lessened by cutting back on marketing, travel, entertainment and replacement hires, while rent cuts would include non-renewals of some sites.
Capital expenditure (CAPEX) savings have also been flagged, pushing the overall cost cutting to $45-$65m.
Ooh Media has also secured an increase for the gearing covenant on its debt facilities. The business last reported net debt of $355m, 2.6 times its annual earnings before interest, tax, depreciation and amortisation (EBITDA). That can now be increased to four times EBITDA.
An Ooh Media spokesperson told Mumbrella that the equity was an important factor in the company’s future.
“This announcement is a positive sign for the company in challenging market conditions, because it reflects the long-term value of the business, and good future prospects for the out-of-home sector in general once conditions ease,” said the spokesperson.
“The announcement brings additional stability and certainty for all of Ooh’s stakeholders – employees, property partners, suppliers, advertisers and shareholders.
“This is a full package of measures supported by our investors, who include HMI Capital, Australian Super, Fisher Funds and Harris Associates, as well as our banking syndicate.”
Ooh Media maintains that the underlying issue wasn’t one of liquidity, but rather the need for an improved balance sheet as the media company faces unprecedented challenges.
“These measures, together with the addition of Mick Helman to the Board and the agreement between Brendon Cook and the Board that he will remain CEO until at least the end of 2020, place the company in a strong position both now, and for when the market recovers. It’s important to remember that it will recover.”
Cook’s commitment to the position will lessen the disruption faced by the business, said Ooh Media, and provides continued leadership and experience during these tough times.
The out of home space is facing even tougher times than most media companies, with the restrictions placed on Australians to stop the spread of coronavirus (COVID-19) which will keep them in their homes and largely away from airports, public transport and outdoor spaces.
Ooh Media has also made the decision to defer its dividend payment for the end of 2019, pushing it to Friday April 3. The company withdrew its FY20 earnings guidance earlier this month.
Earlier this week, it also entered a voluntary suspension.
