The move — which will see INM’s shareholding in the Sydney-headquartered group decrease from 28.95% to just over 18.6% — will be as a direct result of the Irish group not taking part in APN’s proposed equity issue aimed at financing its acquisition of the remaining 50% of its Australian and New Zealand-based radio assets.
However, INM’s largest shareholder, Denis O’Brien, will see his stake in APN jump from 1.5% to just over 11% through his backing of the Australian group’s Aus$246.5m (€161.5m) buyout of its joint venture partner, US media giant, ClearChannel’s, stake in the radio assets.
INM’s decision not to participate is based on it not wanting to launch a further significant capital raise from its shareholders — which would be required — having only recently concluded its own financial restructuring, which included a significant equity issue.
“INM’s priority objective, at this time, is to retain the operational flexibility necessary to reposition its operations for an improvement in Ireland’s evolving media market,” the group said in a statement.
It added, however, that it is “fully supportive” of APN’s strategy and remains “fully committed” to retaining its strategic stake in an enlarged APN.
Analyst reaction to INM’s news was generally positive. “Overall, while this news is negative from the perspective that INM will see its stake reduced, we believe it is favourable that the company doesn’t partake in the raise, given its own balance sheet still remains highly leveraged,” Goodbody Stockbrokers’ Rachael Cairns said.
“Full participation by INM would have been challenging. INM does not have the balance sheet to finance its share of the capital raise (more than €20m) and, as such, it would have had to raise new equity from its own shareholders.
“Given the restructuring and capital-raising undertaken by INM at the end of 2013, this would have been a step too far,” added Davy Stockbrokers’ Simon McGrotty.
The Australian group said that the move to buy out its radio interests in total reflects its confidence in radio as a growth medium and in the ability of its stations to continue to grow market share.
It will also give the group greater control of cash flows, enabling it to strengthen its balance sheet.
“The acquisition of our Australian and New Zealand radio businesses is part of our efforts to streamline APN’s operating structure,” said group chief executive, Michael Miller. “We have reduced the number of part-owned businesses from seven to two. We now receive the full benefit from businesses that remain central to our growth ambitions,” he added.