APN News & Media has announced today it will cash in its share of APN Outdoor for $69 million, but it's business as usual for the outdoor advertising group which continues to report good earnings.
- Michael Miller, CEO, APN
In a bid to strip back on debt, the trans-Tasman media company has been looking to shed costs and consolidate its print portfolio for some time, despite its outdoor advertising business holding over 50,000 panels across Australia and New Zealand, and reporting earnings (EBITDA) of $8.4m in the first half of 2013. The reported buy-out value is 7.5 times the division’s EBITDA for 2013.
Speaking with Print21, APN Outdoor general manager, marketing, Janine Wood, has said that the buy-out is not expected to impact the running of APN Outdoor or APN Outdoor-owned, GSP Print.
"As far as we've been told it's business as usual. The senior management team will continue to run the business with no change in the foreseeable future. For us it's a consolidation, but quite simply it's a busy time for us now and we're focussed on getting on with business," said Wood.
The move to drop its stake in APN Outdoor is in line with APN’s commitment to reduce its current debt facility by $40-50 million in 2013, but will not effect its continued investment in Adshel and Hong King Outdoor. APN has held a 48% share in APN Outdoor since it entered into a joint venture with Quadrant Private Equity in May 2012.
Michael Miller, CEO, APN, has said: “Quadrant has been a strong and supportive partner of APN Outdoor for the past 18 months and the business is well placed as the large format market increasingly adapts to the opportunities of digital media.”
The decision to retain its 50% interest in Adshel sees the media giant focus its sights on the small format outdoor market sector.
In its 2013 interim report, APN reported a 4% boost in the Australian outdoor advertising market, in spite of increased rental costs on a number of strategic transit contracts. Billboards in particular emerged as strong performer, although the overall segment was regarded as ‘weak’. While the first half of 2013 saw APN Outdoor revenue climb by a slender 1% to $97.8m, EBITDA dropped 20% to $8.4m.
APN and Quadrant have agreed in principle to many of the key terms of the proposed transaction, but the full legal documentation remains to be prepared and finalised. The outcome is conditional upon approval and Quadrant’s debt funding arrangements.