Seven West Media (SWM) is seeking to raise a maximum of $612 million to pay down debt and leave it in a better position ahead of any media ownership reforms on the horizon.
The company announced its intentions to the Australian Securities Exchange today. It said it would raise a minimum of $150 million and a maximum of $612 million as part of a deal with parent company Seven Group Holdings (SGH).
Under the deal struck with the parent, SGH has elected to forgo its rights to pick up shares under a previously-announced convertible preference share deal in order to give SWM more scope to raise cash via a pro-rata offer to shareholders.
SWM said the upshot of the manoeuvring is that it would be able to pay down debt, simplify structure, and provide greater financial flexibility.
“Changing consumer demands in media will continue to create new opportunities for us and this proposed transaction better positions us to take advantage of them,” CEO Tim Worner said.
The wrangling comes at a time when media ownership reform noise is being whipped up in Canberra, and rivals are also freeing cash.
The government is believed to be currently weighing up changes to existing media laws, such as scrapping the reach rule, cross-ownership laws, and the anti-siphoning list.
Changes to the legislation could unleash a wave of acquisitions in the space.
It is thought that the potential legislative changes was at least in part behind Nine Entertainment Company's decision to sell off events arm Nine Live to a private equity firm for $640 million.
Post-acquisition, Nine CEO David Gyngell told The Australian that a lot of media assets in Australia looked attractive to the newly-cashed up company.
“I definitely believe media companies are more valuable than a lot of the outside world [does],” Gyngell said.
Earlier this year Seven West unveiled a whopping $1.1 billion impairment on the value of its business, driven primarily by a subdued advertising market.
The announcement came as Seven West reported an 8% drop in underlying profit to $137.5 million for the half year to December 2014.
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