Seven West Media banking on a restructure deal after property sale

Seven West Media’s senior editor, Anthony De Ceglie Picture: Colin Murty

Investment bankers are believed to be ramping up their efforts to find a party to recapitalise Seven West Media as an imminent sale of the headquarters for The West Australian and The Sunday Times that it owns offers some relief for the broadcaster.

As reported online by DataRoom on Friday, it is believed the Kerry Stokes-backed Seven West is about to sell its 2ha Osborne Park property on the outskirts of Perth’s central business district to Prime West for $74.5m.

At the same time, investment banks are understood to be trying to coerce parties into stepping forward for a possible restructure of Seven West, independent of the company, which has Grant Samuel on hand to assist with lender negotiations.

But the prospects of a group offering a financial lifeline right now are not thought to be strong.

The challenge for any party looking at a recapitalisation is that Seven West’s debt is unsecured, unlike that of Nine Entertainment when it was recapitalised by private equity funds numerous years ago to stave off a collapse.

Commitments for sports with the AFL, cricket and potentially the Olympic Games are large and, with about $2bn estimated to be owing to creditors, only about one third of that is owed to lenders, which may position them at the back of the queue.

The thinking is that a stronger likelihood is that the business is privatised by the billionaire Stokes family, which are major investors in Seven West’s largest shareholder, Seven Group, although the family had earlier signalled no interest in investing further in media assets.

It is thought that Seven’s advertising revenue is likely to be down by at least 50 per cent on the back of the coronavirus disruptions, despite a strong increase in audience numbers.

However, television broadcasters and newspaper publishers are not thought to be faring as badly as radio broadcasters and outdoor advertisers, which are believed to be seeing advertising revenue declines of between 60 per cent and 80 per cent.

Seven West owns Pacific Magazines and West Australian Newspaper Holdings, as well as its free-to-air television Seven Network and about 20 regional newspaper titles.

The group has explored a range of asset sales to reduce its net debt, last recorded at $541m.

Its sharemarket value sits at about $132m.

Prime West, a Perth-based property syndicator with more than $3.8bn of real estate under management, is likely to buy Seven West’s office and print centre, covering three properties within Osborne Park, with three-storey office buildings at 50 Hasler Road.

No doubt, a sale and leaseback will be on the cards for the media group.

When the property was placed on the market, the hope for Seven West was that it would prevent the need for an equity raising.

This week, attention will turn to whether Seven West completes the sale of its Pacific Magazines business to Bauer, which would reap about $40m for the company.

Bauer is still said to be assessing whether to continue support for its own Australian business, but most now expect the German media group to complete the magazine deal, to which it is contractually bound, after Seven West extended the time frame for the transaction to be completed.

Seven has also hired Morgan Stanley to sell its $150m-odd Seven Studios business, and a sale of a stake in its transmission tower business TX Australia has been mooted, along with Seven West Ventures.

Redwave Radio has already been offloaded, and aggressive cost-cutting has also been undertaken by chief executive James Warburton.

Five years ago, Seven West’s market value was $2.2bn, but it has suffered from digital disruption from streaming services such as Netflix.

The state of affairs is poor across the media industry from an advertising perspective amid COVID-19 disruptions, despite audience numbers and readership soaring.