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APN would sell 60% of NZ unit, raising A$308.6 mln

APN would sell 60% of NZ unit, raising A$308.6 mln, note offer document shows

By Paul McBeth

Sept. 4 (BusinessDesk) - APN News & Media, the publisher of the New Zealand Herald newspaper and owner of The Radio Network, would sell 60 percent of its New Zealand business, generating gross proceeds of A$308.6 million, according to an offer document for the sale of notes.

The document for the sale of US$250 million of senior unsecured shows Sydney-based APN is considering selling down its stake in APN New Zealand, which consists of its New Zealand newspapers, radio, and GrabOne businesses, in an initial public offer on the NZX.

Of the A$308.6 million proceeds, some A$169.4 million would be raised through the float, and a further NZ$150 million from a 'note payable' as a result of restructuring the New Zealand unit. The offer document assumed funds raised would repay A$241.6 million of APN debt, and A$67.1 million would be added to the media group's cash.

APN's remaining 40 percent stake in the APN New Zealand business is estimated to be valued at A$112.9 million, with every 1 percent increase in price above the IPO book value increasing the estimated equity interest by A$1.1 million and cash proceeds by A$1.7 million, the document said. The media group anticipates a spun-out New Zealand unit would adopt an initial dividend policy to pay 75 percent of net profit to shareholders.

"The potential NZ transaction is one of several opportunities that we are considering and is dependent on market conditions and a satisfactory valuation of APN NZ, amongst other factors," the offer document said. "At this stage, it is uncertain whether we will proceed with the potential NZ transaction, and if we do, what our ownership interest in APN NZ will be following any such transaction."

Any decision will depend on the final pricing of shares in an IPO, it said.

APN’s New Zealand unit last month posted an 8 percent decline in first-half revenue to A$201.6 million, and a 9 percent fall in earnings before interest, tax, depreciation and amortisation to A$34.6 million, reflecting the sale of South Island and Wellington newspapers and several magazine titles, including the weekly Listener magazine, to Germany’s Bauer Media.

The details of the New Zealand plans are included in a supplemental disclosure information notice attached to an offer to raise US$250 million of senior unsecured notes by subsidiary Biffin Pty. The offer will be to qualified institutional investors in the US, with net proceeds used to repay existing debt, diversify APN's funding sources and extend its debt maturities, the company said in a statement.

"The proposed issue of notes in the US market would enhance the flexibility we achieved in the recent refinancing, and extend our debt maturities," chief executive Michael Miller said. "We remain focused on debt reduction as a means of improving our balance sheet, and further creating optionality to continue the positive momentum that has been built over the last 12 months."

Last month APN announced plans to redeem $100 million of NZX-listed bonds in September after refinancing a new banking facility of A$630 million with a syndicate of lenders. The new facility meant the company's next major maturity will come in January 2018, with lower interest costs than previous arrangements.

APN had net debt of A$482.6 million as at June 30, up from A$436.9 million a year earlier. The company's net debt-to-equity ratio rose to 94 percent from 72 percent a year earlier. Operating cash flow dropped 46 percent to A$15.6 million in the six month period compared to a year earlier.

The dual-listed shares of APN last traded at 83 cents on the NZX, and 77 Australian cents on the ASX.


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