SMG to sell Primesight to GMT Communications Partners
31/08/2007
SMG has announced a proposed sale of Primesight Limited to GMT Communications Partners, a leading and long established provider of private equity for mid-market European buyouts in the media and telecoms sectors. The total consideration is up to £62m.
This is made up of £52m payable in cash on completion; and a loan note of £5m, payable at the earlier of five years from completion or an exit of the business by GMT.
A further loan note is payable on a pro rata basis of up to £5m, contingent upon Primesight achieving agreed target profits for the financial year ending 31 December 2007, also payable at the earlier of five years from completion or an exit of the business by GMT.
£1.4m of the cash proceeds are to be placed in a retention account for use by GMT in relation to certain planning consents currently being sought by Primesight, offset by a £0.8m payment to SMG at completion in respect of expected surplus working capital in Primesight.
The valuation achieved represents a clear uplift on indicative offers received prior to suspension of the Primesight disposal process in April.
Proceeds will be used to reduce Group debt.
The disposal is subject to shareholder approval at an extraordinary general meeting to be convened in due course.
SMG has also confirmed that its television and cinema advertising divisions, and Virgin Radio, continue to trade in line with the Board's expectations for the current financial year. A further update on current trading will be included in SMG's interim results for the six months ended 30 June 2007, to be announced on 18 September 2007.
Commenting on the proposed disposal, Rob Woodward, Chief Executive of SMG, said: "This is a good price for the business and clearly ahead of where we were in the previous sale process. This is a strong example of the new Board delivering on its promises. The proceeds of the sale will strengthen SMG's balance sheet while freeing the management team to concentrate on the turnaround of the television business and the disposal of our other non core businesses."
