O'Reilly to retain APN stake as potential bidders flounder

Tuesday 27th January 2009

Irish billionaire Tony O'Reilly will retain his company's 39% stake in APN News & Media, saying deteriorating credit markets had confounded the efforts of investors to finance a bid for the Australian publisher.

The financial crisis has dealt a set-back to Dublin-based Independent News, which yesterday said it didn't expect any improvement in global advertising this year, which will contribute to a forecast 10% drop in operating profit. That didn't stop the media company's shares jumping 18% after it flagged sales of other assets to reduce its heavy debt load.

"The deteriorating state of credit markets made it difficult for interested parties to put together a fully-financed bid for APN at an appropriate value that would be acceptable to both INM and to the other APN shareholders," Independent News said in a statement.

Shares of APN, which publishes the New Zealand Herald and is the largest radio and outdoor advertising operator in Australasia, fell 6.1% to A$2.11 on the ASX, the lowest in at least a decade, valuing O'Reilly's stake at about A$400 million. The stock has sunk 58% in the past 12 months.

Independent News flagged the potential sales of APN in October last year, estimating a sale could help it cut about 800 million euros of debt. It may sell subordinated bonds to finance 200 million euros of bonds maturing in May, it said yesterday.

The Irish media company said there was "significant interest" in its APN stake, though a deal couldn't be reached.

O'Reilly's assets include the U.K.'s Independent newspaper, which is cutting jobs and slashing costs to cope with a downturn in advertising.

Independent News "is currently operating in very challenging economic and advertising conditions," it said. Still, "the group is pleased to confirm that its global and diverse operations are continuing to demonstrate considerable resilience."

O'Reilly failed in a previous takeover attempt of APN about two years ago, when his offer of A$3.8 billion was rejected by other shareholders.

By Jonathan Underhill

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