Photon Group formally begins recapitalisation

Debt-laden Photon Group has moved to the next stage of its do-or-die fundraising effort, announcing its proposals for recapitalisation.

The company – which owns some of Australia’s best know communicatiosn agencies – said that it was looking to raise $102.5m at 10c a share. The last time that Photon’s shares traded on the ASX they were worth $1.02 per share.  

Photon hit trouble after revealing that it would struggle to meet its deferred obligations to owners of the agencies it had bought. Photon’s portolio includes the likes of BMF, BWM, Frank PR and Naked Communications. it has since renegotiated the terms of most of those payments.

In its announcement to the ASX, the company also revealed that more than 10% of its fundraising will have to be spent on costs incurred organising the recapitalisation. It said:

The proceeds from the Equity Raising will be used to:

  • Pay down approximately $67.1 million of Photon’s existing $280 million bank debt facilities, which today are drawn to approximately $274 million;
  • Pay approximately $22.5 million of the Deferred Consideration Payments due on or around 30 September 2010;
  • Pay various transaction costs associated with the Recapitalisation Proposal including the costs of the Equity Raising, Debt Refinancing and Deferred Consideration Restructure totalling approximately $12.9 million.

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