SMG launches £95.1m rights issue to cut debts
SMG, owner of Scottish Television, has launched a £95.1 million rights issue in a bid to slash its debt - a move that knocked around 12 per cent off SMG's share price.
The company announced the move today in what is being seen as an attempt to avoid an effective "fire sale" of Virgin Radio.
A sale of Virgin had been considered in a move to tackle the group's massive debt, which stood at 189.4m on June 30.
Shareholders are to be offered the chance to buy two new shares at a cut-price rate of only 15p each. A total of 633 million new shares will be made available.
Chief executive Rob Woodward believes the share issue is a key measure for tackling the debt. He said: "The board of SMG believes that the rights issue is an important step in the transformation of the group's balance sheet. It will significantly reduce debt, substantially decrease interest payments, allow flexibility in timing of disposals and ensure that we can now focus fully on achieving our broadcasting KPIs (key performance indicators)."
SMG's underlying profits were 10m in the first half of the year, while the firm's interest bill was 7.5m because of its high levels of debt. Nervy investor sentiment forced it to shelve a planned 80m float of Virgin Radio.
Mr Woodward said the cash would allow it to sell Virgin from "a position of strength".
Investec Securities' Steve Liechti said: "This is a positive move as the group was under pressure given its requirement to reduce debt and a seeming lack of interest in Virgin Radio."
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Wednesday 19 June 2013
Temperature: 9 C to 18 C
Wind Speed: 16 mph
Wind direction: West
Temperature: 12 C to 20 C
Wind Speed: 8 mph
Wind direction: East