Seven renegotiates its $750m banking facility, lessening the pressure of its debt

Seven West Media has successfully negotiated a new deal with its banks, releasing the pressure of its debt and allowing it to continue with its transformation plan.

In an announcement to the Australian Securities Exchange (ASX) on Thursday, the media company advised it had secured a new deal for its $740m banking facilities with its eight existing lenders. This includes $250m it can use during COVID-19 to secure itself.

Seven has bought itself more time on its debt

CEO James Warburton said the new deal showed ‘confidence’ in the SWM business.

“We would like to thank our lenders for working with us to amend our facilities, for their continued confidence in our business and transformation strategy and for providing us funding certainty to enable us to implement that strategy over the next 18 months.”

$450m of Seven’s debt was due to mature in 2021, providing Seven with immediate pressure. That has now been pushed back to the second half of 2022, although Seven will pay increased costs and upfront fees as a result.

Seven will update the market on where its net debt level currently sits in its August financial results, but as of December 2019, it was $541m.

The amended facilities were secured via a General Security Deed, which usually means a lender will have access to the company’s assets as collateral for the loan.

Seven has embarked on a fire sale of its assets over the last 12 months, selling WA radio business Redwave for $28m, property for $7m, its magazine asset Pacific Magazines for $40m and the newspaper headquarters in WA for $75m. It has also sold its UK Seven Studios assets and a deal is reported to be underway for the entire Seven Studios business for $150 – $200m.

Seven is undergoing cost savings of $170m across its business, including the savings it made on its renegotiated AFL deal. The AFL also plays a strong part in Seven’s content-led plan for the future.

“We are working tirelessly to transform both our television and newspaper businesses. While we are focused on achieving the lowest possible cost-base, our energy has been directed to driving audience and winning the content battle in both television and newspapers to deliver ratings, revenue and cash flow,” said Warburton.

“Our content-led growth strategy has come to life with the success of Big Brother, combined with the strength of the AFL and our programming spine throughout the day. We continue to focus on reducing our debt with a number of significant asset sale processes currently underway.”

According to the company, it’s television cost base will be at the lowest level since 2007 after it delivers its cost savings and the business will have its lowest headcount since 2003.

“Additional temporary cost savings of $50 million were derived in FY20 to offset the immediate impact of weak advertising markets,” said the company.

More details are expected to be provided on August 25 when the company delivers its FY20 results.


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