Shareholders in APN News and Media yesterday approved the break up of the group by greenlighting the spin – off its New Zealand print and radio interests into a standalone company.
The decision was made at an extraordinary general meeting in Sydney.
But there’s still an unresolved issue for APN and that is the ownership of its Australian print interests, especially the 16 regional dailies in NSW and Queensland.
Now APN and its Kiwi affiliate await the decision of NZ regulators to the proposed merger of NZME (the new company) with the print interests of Fairfax Media.
An explanatory document on that merger was issued earlier this week by the NZ Commerce Commission, the country’s competition regulator. APN shareholders were told that the demerged NZ businesses would enhance shareholder value by enabling independent focus for each company to allow them to better pursue their own strategic priorities and growth initiatives.
Although the deal needs Overseas Investment Office approval, NZME shares could be trading on the NZX later this month. NZME chief executive Michael Boggs said OIO approval was a focus at the moment.
"We would ideally receive that in the next two weeks which would allow us to be listing on the exchange on June 27,” he said. "The good thing now that as a separate listed entity we do have the ability manage our own capital and our own investment decisions for the New Zealand business.”
In the past the New Zealand operation had been subject to competing demands with the rest of the APN Group, said Boggs. "We can now make the investments or focus on the area that we can think will give a return to our New Zealand shareholders based on what the customers and audience in New Zealand want.”
The transaction will see a one-for-seven share consolidation in the Australian company, then a distribution of NZME shares to those investors on a one-for-one basis.
The deal then frees up APN to focus on its two Australian radio channels and its outside advertising business, while NZME can pursue its merger with Fairfax’s New Zealand arm.
APN chair Peter Cosgrove said the board had considered keeping the status quo, selling NZME or floating the New Zealand business before deciding the demerger would create the most value for shareholders.
“The demerger gives both APN and NZME flexibility to pay dividends within the next 12 months,” Mr Cosgrove told the meeting.
He said said his board intends to initially target a dividend payout ratio of approximately 40-60% of underlying net profit, subject to other strategic priorities.
"And while it will ultimately be a decision for the NZME board, it is intended that there will be an initial dividend payout ratio of 60-80 per cent of underlying net profit, subject to maintaining appropriate leverage," he said.
It was proposed that NZME’s first dividend would be considered for the six month period to June 30.
APN chief executive Ciaran Davis said NZME has exceeded earnings before interest, tax, depreciation and amortisation targets, which was $67.5 million in 2015 on revenue of $433 million.
The demerger gives the group flexibility to invest in the entities separately, “allowing them to succeed in their individual markets”. Davis told the meeting yesterday.
APN shares last traded at 63 cents on the ASX, down 1.5
