Activist investor Sandon Capital has increased its stake in target company broadcaster SCA.
Sandon lifted its holding by almost a third to 8.1% from 6.1%, giving it 19,464,222 shares, according to fillings to the ASX.
The company last traded at 61 cents a share.
The funds manager is campaigning for change at SCA, including sacking and replacing the board of directors.
Sandon has described the board of directors as being in “self-preservation” mode in a tough advertising market.
It has attacked the company’s decision to resume paying dividends, its announcement of an “unrealistic” executive bonus scheme and says SCA needs to further reduce debt levels.
Sandon sees upside in SCA.
“While traditional media has been declining for a number of years, we consider radio has characteristics that make it a far more compelling medium than either print or television,” it says.
“SXL has faced distractions in recent years, notably proposals involving changes of control. In late 2023, a non-binding indicative offer for SXL was proposed, with an implied price of $0.94 per share. In mid-2024, this proposal was increased, but in the end no binding transaction could be agreed.
“We believe SXL has valuable assets. The company trades at a substantial discount to our estimate of its intrinsic value, though we consider that its full value can only be realised with Board and management changes.”
The SCA last month replied that it had support from more than 50% of its voting capital including Thorney Investment Group (and Associates) (15%), Spheria Asset Management (10%) and Ubique Asset Management (10%).
SCA, in a trading update last month, reported “strong” audio revenue, up about 9% and ahead of its own guidance, for the first four months of calendar 2025.
However, CEO John Kelly said the post-federal election advertising market is short with limited visibility, which makes it difficult to forecast in the lead up to the end of the financial year and beyond.
The company reported revenue up 5.3% to $209.7 million for the half year to December, delivering on its "transformation strategy". Net profit after tax was up 5.5% to $3.2 million.
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