APN launches $A99m rights issue to strengthen balance sheet

New Zealand Herald publisher APN News and Media is raising $120m in a new share rights offer

Transtasman radio and newspaper group APN News & Media Ltd has launched an equity raising of up to A$99 million ($129.20 million) to help reduce debt.

APN, publisher of the New Zealand Herald and nzherald.co.nz also said no interim dividend was expected for the 2009 financial year as part of savings directed towards debt reduction.

"Dividend policy for subsequent periods will reflect appropriate conservatism in line with prevailing economic conditions," APN said in a statement just released.

The equity raising comprises a one for five "accelerated non-renounceable pro-rata entitlement offer" at A$1 per share.

The institutional component, representing about A$79 million is fully underwritten by RBS Equity Capital Markets .

"APN intends to use the proceeds of the entitlement offer to reduce debt and strengthen its balance sheet," the company said.

The company said it was in discussions with its banks in relation to an extension of the December 2009 debt maturities, with an extension announcement expected before the end of its first half, on June 30, 2009.

Chief executive Brendan Hopkins said the capital initiatives put the company well on track with its debt reduction program.

"The equity raising coupled with the announced capital management initiatives ensures that APN retains a high degree of financial and operational flexibility in these uncertain times and that APN is now well positioned in relation to the debt reduction programme outlined at the annual general meeting," Mr Hopkins said.

APN's largest shareholder, debt laden Irish-based key Independent News & Media (INM) will not take up any of the offer.

INM tried and failed to sell APN but recently confirmed that it remains a long term holder of APN.

Earlier this month, APN cut its annual earnings guidance because of the advertising slump and said Independent News remained a long-term committed major shareholder.

The company reiterated its guidance for full year net profit would be in the range of A$100 million to A$110 million unless there is a further deterioration in advertising and credit markets.

First half net profit is expected to be about A$40 million.

APN shares are in a trading halt. They last traded at A$1.19.

- AAP