Parties circling oOh!media again?

oOh!media operates billboards and signs in public places.

oOh!media is hosing down speculation this week that it could be a point of interest for suitors offering to buy a stake in the business, as its liquidity levels once again come under the spotlight.

There has been talk in the market that parties may be sounding out the company about whether there could be interest for an investor buying an equity stake in oOh!media and that it may be keen to boost its liquidity levels.

But the company’s managing director, Brendon Cook, was quick to dismiss such suggestions on Tuesday, saying that the company had not fielded any approaches and categorically denied that it was looking to boost its liquidity levels through any equity raising or equity injection, adding that no discussions on the matters were taking place.

oOh!media raised $167m of fresh equity on March 26 in the grip of the coronavirus pandemic as it remained under pressure to reduce what was then a $354.5m net debt pile.

But some believe the company might be eager to gain even more funds, as billboard operators and media companies more broadly remain among the hardest hit from the COVID-19 pandemic disruptions.

oOh!media raised a lot of money, say some, but others say it still has debt, which means it remains subject to the mercy of banks, and has lease liabilities, so the strength of the recovery from COVID-19 remains key.

Sources close to oOh!media say the business is well capitalised and not in need of fresh funds, with its share price closing on Tuesday at $1.065.

If it was, an equity raising is likely to be off the cards, as it would test the patience of investors.

But talk persists, despite the strong and categoric denials from oOh!media.

Major shareholder HMI out of the US lifted its interest to just over 18 per cent in oOh!media, and was offered a boardroom seat for supporting the heavily dilutive raise at 53c a share, which was 37 per cent below its last trading price of 84c.

Following the raise by oOh!media, which operates billboards and signs in public places, radio broadcaster Here, There and Everywhere, purchased a 4.2 per cent interest in the media business, which prompted the market to wonder whether it was plotting a takeover.

HT&E, which used to be known as APN News and Media, is flush with cash and an acquisition of the business or a move to increase it stake remains a logical step.

It had cash on its balance sheet of $111m as at December.

HT&E’s market value is $284m, while oOh!media is worth $562.2m, so it is unlikely to afford a deal, but a cash and scrip merger makes sense.

Should it proceed with a merger, the irony would be that HT&E would be buying back the street sign business Adshel it sold to oOh!media for $570m in 2018, and would once again be an outdoor advertiser as well as the owner of the Australian Radio Network with station brands such as KIIS and Pure Gold.

HMI might lift its stake further or privatise the business, and there is always private equity firm Quadrant, which owns the oOh!media billboard rival QMS.

Quadrant would no doubt be keen to build scale to create a dominant industry group that it could list or sell further down the track and secure a major windfall.

Credit Suisse is close to HT&E.