Southern Cross Media secures bulk of $169m capital raising

The group, which operates radio stations Triple M and Hit Network, has raised $149m from institutional investors.

The group, which operates radio stations Triple M and Hit Network, announced on Tuesday it had raised $149m from institutional investors. Picture: Supplied

Southern Cross Media has secured the bulk of its proposed $169m capital raising to cut its $330.5m debt pile during the coronavirus crisis, as the media industry grapples with a big drop in advertising revenue.

The group, which operates radio stations Triple M and Hit Network, announced on Tuesday it had raised $149m from institutional investors, as part of its fully underwritten placement and entitlement offer.

Southern Cross said on Tuesday the 9c a share placement attracted "strong demand" and the institutional entitlement offer had a take up rate by institutional shareholders of approximately 92 per cent.

The group, which hasn't traded on the ASX since its request for a trading halt on March 23, saw its shares drop more than 27 per cent to 12c on Tuesday afternoon following the capital raising. It has a market capitalisation of $92.3m based on the current share price.

The retail component of the entitlement offer is expected to raise a further $19.5m before costs. It is set to open on April 15 and close on Apirl 27.

Southern Cross directors and senior leadership team members, who are shareholders, plan to participate in the retail component of the entitlement offer by taking up their pro rata entitlement for new shares.

The company announced on Monday its capital raising plan, which was reported by The Australian’s DataRoom last week, together with a series of cost-cutting measures and the suspension of dividend payments.

Southern Cross is the second media company to raise capital to pay day debt in the wake of the economic turmoil after outdoor ad company oOh!media, which last month raised $167m to reduce its $354.5m debt.

The broadcaster is looking to save between $40m and $45m this year, and has cancelled its interim dividend to save about $21m. It also won’t pay a final dividend this year or next.

It has also secured support from its banks, with its syndicated debt facility amended to increase leverage covenant to 4.5 times net debt to underlying earnings from 3.5 times from June 30 for 12 months. It has withdrawn $50m to “further enhance liquidity”, and has $57m available if needed.

On Monday, Southern Cross disclosed its ad revenue dropped 10 per cent for the nine months to March 31 from a year earlier.

Southern Cross said it was difficult to provide revenue guidance for the remainder of calendar year 2020, but cautioned that ad revenue from April to September is expected to be “materially impacted by COVID-19 and to be 30 per cent more down” from the same six-month period last year.