APN may be broken up for sale

The failure of Sir Tony O’Reilly’s Independent News & Media (INM) to sell its 39% stake in Australasian media company APN could still see individual assets such as the New Zealand Herald or the outdoor advertising division sold off.

INM is under heavy pressure to offload assets in order to ease a €1.4 billion debt burden, of which the attempted sale of APN for €800 million was meant to be a major component.

One media source said an asset such as the New Zealand Herald would presumably be much easier to attract finance for than the entire stable of APN titles, outdoor advertising and radio station assets.

The newspaper might also form the basis for a new media company that potentially could be floated on the New Zealand stock exchange, given the Herald’s much touted (though declining) profitability.

APN corporate adviser ABN Amro refused to comment when asked by NBR if there was a chance on APN being broken up and the assets sold off in chunks.

Despite trumpeting “unsolicited” offers for APN late last year – “and its individual divisions,” it appears only two buyers were ever in the hunt: Australia’s Seven Network and Lachlan Murdoch, both of which looked at the deteriorating ad market, debt levels, the credit crunch, and plunging asset values – and walked away.

INM has said it will now look to focus on offloading loss-making assets such as London-based Independent titles, halving capital expenditure to about €30 million, cancelling the dividend (€60.2 million last year), issuing a €200 million bond to refinance a €200 million loan due in May, and company directors have agreed to have their fees and salaries trimmed by 10% while forgoing bonuses in 2008.

The share price of INM has slumped 95% over the past two years, which the company describes as “significant and unwarranted.

"[INM] believes that the current market capitalisation does not fairly reflect the true value of the underlying assets, the current trading performance and the inherent profitability and cash generative nature of the group's operations," the company said.