Seven West Media looks to raise up to $600m from shareholders ahead of potential reforms
Worner
Seven West Media (ASX: SWM) has frozen its shares and announced it is looking to raise between $150m and $600m by issuing new shares in the company, in a bid to pay off debt and put some cash on hand.
The move comes amid potential changes to media ownership laws which could see companies like Seven West Media being allowed to buy other media companies, such as its regional affiliate Prime.
This morning the company also announced preference shares held by Kerry Stokes controlled Seven Group Holdings (ASX: SVW), already the majority shareholder in the company, were being converted into full shares a year early, netting SWM around $340m.
In a notice to shareholders this morning SWM CEO Tim Worner said the early conversion of Seven Group Holdings’ preference shares “removes uncertainty”, with the cash allowing them to look at new investments.
“SGH, our largest shareholder, has put their support behind Seven West Media and we are pleased to offer an opportunity to our other shareholders to invest further in the company. The proceeds from the capital raising will strengthen our balance sheet and add financial flexibility to pursue further growth opportunities available to us,” he said.
However, if there is not a good take up of the cut-price share offer then Seven Group Holdings could boost its ownership of the company to 45 per cent, although if all shareholders take up the offer its holding will remain unchanged.
SWM also said said it expects to make an underlying profit of between $205m-$215m this year, after writing down the value of its TV assets by $940m in its half year results in February.
The offer to shareholders, which SGH has agreed not to take part in, sees them offered shares at a discounted price of $1.25 each, a discount on the average share price of the last five days of $1.28, with a maximum of 490m new shares being created. The offer price is an9 per cent discount on the closing price of $1.36 yesterday.
The company owns assets including the Seven Network, WEst Australian Newspapers, Pacific Magazines and half of digital venture Yahoo7.
Earlier this year SWM took a 50 per cent holding in streaming service Presto alongside pay-TV operator Foxtel, a sign it is looking to broaden its revenue streams.
Alex Hayes
