TIDMUTV
RNS Number : 6370C
UTV Media PLC
19 October 2015
This announcement is not for release, publication or
distribution directly or indirectly, in whole or in part, into or
from any jurisdiction where to do so would constitute a violation
of the relevant laws of such jurisdiction.
UTV Media plc
("UTV" or the "Group")
Proposed Sale of UTV Television for GBP100 million
On 24 August 2015, UTV Media plc (LSE symbol: UTV), the provider
of media, television, news and radio broadcasting services,
confirmed that it was in discussions regarding a potential sale of
its television assets. UTV today announces that it has entered into
a conditional agreement to sell the entire issued share capital of
UTV Limited and its wholly owned subsidiary UTV Ireland Limited,
which together comprise the whole of the television business of the
Group ("UTV Television") to ITV Broadcasting Limited ("ITV") for a
cash consideration of GBP100 million on a cash-free-debt-free
basis, subject to an agreed target working capital amount remaining
in UTV Television at completion of the sale (the "Sale"). The
consideration paid at completion of the Sale ("Completion") will be
subject to certain adjustments based on actual cash, debt and
working capital of UTV Television at Completion as determined
through a completion accounts process. As part of the Sale, the UTV
defined benefit pension scheme (the "UTV Pension Scheme") will
remain with UTV Limited and therefore UTV and its subsidiary
undertakings following Completion (the "Continuing Group") will
cease to have liability to fund the UTV Pension Scheme from
Completion.
Highlights:
-- Consideration of GBP100 million in cash recognises the value
inherent in the UTV Television business. Net proceeds after
estimated tax, fees and expenses are approximately GBP98
million.
-- UTV Television consists of UTV Northern Ireland and the recently launched UTV Ireland.
-- For the year ended 31 December 2014, UTV Television had
revenues of GBP34.7 million out of total revenues of the Group of
GBP116.0 million, profit before tax and finance costs of GBP5.5
million out of total profit before tax and finance costs of the
Group of GBP19.7 million (taking into account an allocation of the
central costs of the Group) and gross assets of GBP93.2 million as
at 31 December 2014 out of total gross assets of the Group of
GBP231.0 million.
-- For the six month period ending 30 June 2015, UTV Television
had revenues of GBP21.6 million out of total revenues of the Group
of GBP58.3 million, losses before tax and finance costs of GBP3.9
million out of total profit before tax and finance costs of the
Group of GBP2.7 million (taking into account an allocation of the
central costs of the Group) and gross assets of GBP96.9 million as
at 30 June 2015 out of total gross assets of the Group of GBP222.5
million.
-- As part of the Sale, the UTV Pension Scheme will remain with
UTV Limited and therefore the Continuing Group will cease to have
liability to fund the UTV Pension Scheme from Completion. As at 30
June 2015, the UTV Pension Scheme had an IAS19 deficit of GBP3.2m
and, based upon the scheme's actuarial update, a deficit on a
technical provisions basis of GBP9.6 million.
-- The Sale will accelerate the delivery of value to
shareholders of UTV ("Shareholders"). The Group's existing bank
facilities will be repaid in full and following Completion, the
Continuing Group's borrowings under the proposed new facilities
will be kept to a net debt to EBITDA ratio of less than two, which
the directors of UTV (the "Board") considers to be an appropriate
level for a business of the size of the Continuing Group. The Board
proposes to return such amount of the net cash proceeds to
Shareholders as it considers appropriate at the relevant time,
taking account of the expected net proceeds from the Sale together
with the forecast operating cash flow of the Continuing Group,
including associated working capital and capital expenditure
requirements. Further details of the amount, method and timing of
the return of cash will be set out in a circular (the "Circular")
which is expected to be posted to Shareholders as soon as
reasonably practical.
-- The Sale will enable the Continuing Group to focus on
opportunities within radio and online.
-- The Sale constitutes a Class 1 transaction for UTV under the
listing rules of the Financial Conduct Authority (the "Listing
Rules") and is therefore conditional upon the approval of
Shareholders. The Sale is also conditional upon obtaining the
necessary regulatory approvals in the Republic of Ireland.
-- In connection with the Sale and conditional upon Completion
and the approval of Shareholders, the Continuing Group has agreed
to cease using the "UTV" name with effect from Completion. A
resolution to change UTV's name to a new name not containing the
word "UTV" will be proposed at a general meeting of Shareholders to
be convened in due course prior to Completion.
Commenting on the Sale, Richard Huntingford, Chairman of UTV
said:
"The last few years have seen increasing consolidation in the
global television sector, creating media companies that span
content, broadcast and platform ownership. Having successfully
extended the reach of our television business with the launch of
UTV Ireland, I believe that Shareholder value can be maximised
through our television interests becoming part of ITV's global
broadcast and content business.
"I believe that the price reflects the inherent value within the
UTV Television business. ITV will be a good owner of the business
and, with its scale and reach, will be able to accelerate the
future growth of the business. I want to thank all the UTV
Television staff for their outstanding service to UTV over many
years, and I wish them every success in the future.
"As the UTV Pension Scheme will remain with UTV Limited, this
removes any future funding liability from the Continuing Group, and
our Shareholders will benefit from a significant return of cash. We
plan to continue to pursue our successful strategy in our radio
businesses."
Enquiries:
UTV Media plc
Orla McKibbin, Director of Communications
Tel: +44 (0) 28 9026 2188
Numis Securities Limited (Joint Financial Adviser, Joint Broker
and Sponsor)
Nick Westlake
Lorna Tilbian
Chris Wilkinson
Paul Gillam
Tel: + 44 (0) 20 7260 1000
Goodbody Stockbrokers (Joint Financial Adviser and Joint
Broker)
Kevin Keating
John Flynn
Siobhan Wall
Tel: +353 (0) 1 641 0600
This announcement has been issued by, and is the sole
responsibility of, UTV Media plc.
Cautionary Statement
Numis Securities Limited ("Numis") which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for UTV Media plc and no one else in
connection with the Sale and will not be responsible to anyone
other than UTV Media plc (whether or not a recipient of this
document) for providing the protections afforded to its clients or
for giving advice in connection with the Sale, the contents of this
document or any of the transactions, arrangements or other matters
referred to or contained in this document.
Goodbody Stockbrokers ("Goodbody") which is authorised and
regulated in the Republic of Ireland by the Central Bank of
Ireland, is acting exclusively for UTV Media plc and no one else in
connection with the Sale and will not be responsible to anyone
other than UTV Media plc (whether or not a recipient of this
document) for providing the protections afforded to its clients or
for giving advice in connection with the Sale, the contents of this
document or any of the transactions, arrangements or other matters
referred to or contained in this document.
Proposed Sale of UTV Television for GBP100 million
1. Introduction
UTV today announces that it has entered into a conditional
agreement to sell UTV Television to ITV for a cash consideration of
GBP100 million on a cash-free-debt-free basis, subject to an agreed
target working capital amount remaining in UTV Television at
Completion. The consideration paid at Completion will be subject to
certain adjustments based on actual cash, debt and working capital
of UTV Television at Completion as determined through a completion
accounts process. As part of the Sale, the UTV Pension Scheme will
remain with UTV Limited and therefore the Continuing Group will
cease to have liability to fund the UTV Pension Scheme from
Completion.
Due to its size, the Sale constitutes a Class 1 transaction for
UTV under the Listing Rules and accordingly requires the approval
of Shareholders. The Circular containing further information on the
disposal of UTV Television as well as a notice convening a general
meeting to approve the Sale (the "Sale Resolution") will be sent to
Shareholders as soon as reasonably practicable.
2. Background to and reasons for the Sale
Over the past two decades, the Group has diversified through
investment in other areas of the media sector and now, in addition
to its core television activity, owns successful radio and digital
media businesses in the UK and Ireland. Recently, the Group
extended its television business into the Republic of Ireland with
the launch of a new channel, UTV Ireland, on 1st January 2015.
As the Group has pursued its diversification strategy, the UK
independent television sector has consolidated, with 12 of the
original 15 regional broadcasters now under ITV's ownership. Whilst
retaining its independence, the Group's television operations, over
the years, have become increasingly entwined with ITV, culminating
in the long-term television network agreement signed with ITV in
March 2012. The Group's relationship with ITV was extended further
in November 2013 through a 10 year programme supply agreement for
its UTV Ireland channel.
(MORE TO FOLLOW) Dow Jones Newswires
October 19, 2015 03:09 ET (07:09 GMT)
UTV's businesses operate in dynamic and competitive markets that
continue to experience significant change. The Board has
consistently monitored the performance of these businesses with a
view to ensuring that maximum value is derived from them and
delivered to Shareholders. Increasing consolidation has been a
feature of the television sector, creating media companies that
span content, broadcast and platform ownership.
The launch of UTV Ireland, with licensing and programming
agreements similar to its sister channel in Northern Ireland, has
created a television business which the Board considers to be
attractive and which broadcasts across the island of Ireland. In
assessing the value of that business for Shareholders, the Board is
mindful of the further investments required to bring UTV Ireland to
profitability and believes that the offer from ITV unlocks that
value while reducing risk and enabling the Continuing Group to
focus on opportunities within radio and online.
3. Information on UTV Television
The UTV Television business operates UTV, the Channel 3 public
service broadcast licence for Northern Ireland and UTV Ireland, a
recently launched dedicated television channel for the Republic of
Ireland which launched on 1 January 2015.
Based in Belfast, UTV is the most watched channel in Northern
Ireland delivering high quality popular home produced programmes
backed up by the best of the ITV network. UTV first went on air in
1959 as part of the ITV network and has held the Channel 3 public
service broadcasting licence ever since. UTV was also the first
commercial television operator on the island of Ireland.
Based in Dublin, UTV Ireland went on-air on 1 January 2015
utilising the existing UTV approach of combining high quality news,
current affairs, entertainment and drama.
The digital media businesses Simply Zesty and Tibus will not
form part of the Sale and will remain part of the Continuing
Group.
4. Financial Information on UTV Television
For the year ended 31 December 2014, UTV Television had revenues
of GBP34.7 million out of total revenues of the Group of GBP116.0
million, profit before tax and finance costs of GBP5.5 million out
of total profit before tax and finance costs of the Group of
GBP19.7 million (taking into account an allocation of the central
costs of the Group) and gross assets of GBP93.2 million as at 31
December 2014 out of total gross assets of the Group of GBP231.0
million.
For the six month period ending 30 June 2015, UTV Television had
revenues of GBP21.6 million out of total revenues of the Group of
GBP58.3 million, losses before tax and finance costs of GBP3.9
million out of total profit before tax and finance costs of the
Group of GBP2.7 million (taking into account an allocation of the
central costs of the Group) and gross assets of GBP96.9 million as
at 30 June 2015 out of total gross assets of the Group of GBP222.5
million.
Further financial information on UTV Television will be set out
in the Circular.
5. Financial effects of the Sale and use of proceeds
The Group is expected to receive net cash proceeds (after
deductions of transaction taxes, fees and other transactional costs
of approximately GBP2 million) of approximately GBP98 million from
the Sale. The Board will consider the application of these proceeds
following Completion, but it is anticipated that they will be used
as follows:
-- Taking account of the expected net proceeds from the Sale
together with the forecast operating cash flow of the Continuing
Group, including associated working capital and capital expenditure
requirements, the Board proposes to return such amount of the net
cash proceeds to Shareholders as it considers appropriate at the
relevant time. Further details of the amount, method and timing of
the cash return will be set out in the Circular which is expected
to be posted to Shareholders as soon as reasonably practicable;
-- The Group's existing bank facilities will be repaid in full
and following Completion, the Continuing Group's borrowings under
the proposed new facilities will be kept to a net debt to EBITDA
ratio of less than two, which the Board considers to be an
appropriate level for a business of the size of the Continuing
Group; and
-- The remainder of the cash proceeds will be used to fund
future investments consistent with UTV's strategy and for general
working capital purposes.
6. Principal terms of the Sale
Under the terms of the Sale Agreement, UTV has agreed to sell
UTV Television to ITV for a cash consideration of GBP100 million on
a cash-free-debt-free basis, subject to an agreed target working
capital amount remaining in UTV Television at Completion. The
consideration paid at Completion will be subject to certain
adjustments based on actual cash, debt and working capital of UTV
Television at Completion as determined through a completion
accounts process.
As part of the Sale, the UTV Pension Scheme will remain with UTV
Limited and therefore the Continuing Group will cease to have
liability to fund the UTV Pension Scheme from Completion. As at 30
June 2015, the UTV Pension Scheme had an IAS19 deficit of GBP3.2m
and, based upon the scheme's actuarial update, a deficit on a
technical provisions basis of GBP9.6 million.
Completion is subject to the satisfaction of the following
conditions: (i) the passing of the Sale Resolution and (ii) receipt
of the necessary regulatory approvals in the Republic of
Ireland.
A break fee of GBP1.0 million will be payable by UTV to ITV if
the Sale Agreement is terminated because Shareholders fail to pass
the Sale Resolution by 31 December 2015.
In connection with the Sale, the Continuing Group has agreed to
cease using the "UTV" name with effect from Completion. A
resolution to change UTV's name to a new name not containing the
word "UTV" will be proposed at a general meeting of Shareholders to
be convened in due course prior to Completion.
UTV has agreed to pay GBP10 million into a retention account to
cover warranty and tax indemnity claims if, within 7 years of
Completion, UTV disposes of the talkSPORT radio station. This
obligation will not apply on a sale of UTV itself.
A further summary of the principal terms and conditions of the
Sale will be set out in the Circular.
Information on the Continuing Group and future strategy
The Continuing Group will be closely focussed on radio. In Great
Britain, UTV's radio assets consist of talkSPORT and 12 local radio
stations, of which the majority are based in the north west of
England. As previously noted, a strategic review of those local
stations is being carried out with the sale of one station, Juice
FM in Liverpool, having completed on 8 October 2015.
UTV's national radio station, talkSPORT, is part of a consortium
with Arqiva and Bauer Media, which won the licence to operate the
second national radio multiplex, D2. As part of the new services on
that multiplex, talkSPORT will be launching three new national
radio stations, talkRADIO, talkSPORT 2, and, under a 12 year
licence agreement between Virgin Group and UTV, Virgin Radio. The
successful launch of these three new digital stations will be a
strategic priority for the Continuing Group.
Another strategic priority will be the development of talkSPORT
International which currently provides football commentary in six
languages in 52 territories around the world. talkSPORT
International will seek to further monetise its Premier League
worldwide audio rights by expanding its geographic footprint, by
broadening its broadcaster base and by creating attractive packages
for sponsors and advertisers.
TalkSPORT has grown its audience in the UK by more than 50 per
cent since it was acquired by UTV in June 2005 to reach
approximately three million listeners every week. Those listeners
are mostly male and have demographic characteristics which are
considered to be attractive to advertisers. As a result, talkSPORT
has been able to outperform the market in terms of revenue growth.
Maintaining talkSPORT's strong audience performance will be a
primary objective for the Continuing Group, as well as seeking
opportunities to leverage the strength of the talkSPORT brand.
In Ireland, UTV is the largest local radio operator with seven
stations broadcasting from Belfast, Dublin, Cork, Limerick and
Drogheda and a national advertising sales house based in Dublin.
The Group's radio stations command strong positions in the key
urban areas in which they operate. As well as providing local
advertisers with effective marketing solutions, its audiences are
combined as an "Urban Access" package to give a national footprint
which the Board considers to be attractive to national advertisers.
A key focus for the Continuing Group is to continue to be a radio
leader in each area in which it operates through investment in high
quality programming and marketing.
UTV's strong audience delivery mitigated the worst effects of
the deep advertising recession which Ireland experienced over the
past few years. Macro conditions have continued to improve and the
Board believes that UTV Radio Ireland is well positioned to take
advantage of the ongoing economic recovery which should see
commensurate growth in the Irish advertising sector.
The Board expects that the Sale will lead to a simplification of
the Continuing Group's financial reporting and central
administration processes, and as such expects to be able to make
cost savings in these areas over time.
Change of name
Under the terms of the Sale Agreement, the Continuing Group has
agreed to cease using the "UTV" name with effect from Completion.
It is therefore necessary for UTV to adopt a new corporate name
from Completion. Accordingly, a resolution to change UTV's name to
a new name not containing the word "UTV" will be proposed at a
general meeting of Shareholders to be convened in due course prior
to Completion.
7. Expected timetable to Completion
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