Seven West Media (SWM) has suspended trading on the ASX ahead of a $440 million capital raising to pay down its debt as the ad market trends downwards.
SWM's net debt at the end of June was $1.87 billion and should drop to approximately $1.44 billion after the capital raising.
The media company is offering 333 million new shares at $1.32 per share. Existing Seven shares closed at $1.62 on Friday and will recommence trading on Thursday.
SWM's two largest shareholders, Seven Group Holdings and KKR which holds 33.2% and 11.8% respectively, are expected to take up their share of the entitlement offer - KKR through the retail entitlement - as will SWM directors.
In the capital raising presentation issued to the ASX, SWM said the wider advertising market has trended below the previous year and believes it will continue to do so in the near term.
It said: “The amount of advertising revenue generated by SWM is dictated by advertising market conditions. Since businesses generally reduce or relocate their advertising budgets during economic recessions or downturns, the strong reliance upon advertising revenue by SWM makes its operating results susceptible to prevailing economic conditions.”
SWM owns assets across TV in Seven Network, newspapers in The West Australian, magazines in Pacific Magazines and digital in Yahoo!7.
Its TV rival, Ten Network Holdings, also undertook a capital raising recently, which aimed to bolster its coffers by $200 million.
SWM has expects it financial year 2012 full year underlying operating earnings before interest and tax to be approximately $473 million, marginally above its previous guidance of between $460 million and $470 million. The board will pay dividends of 6.0 cents per share in October and April.
Follow @AdNews on Twitter for breaking stories and campaigns throughout the day.
Have something to say? Send us your comments using the form below or contact the writer at wenleima@yaffa.com.au
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.