The scaled back float of John Singleton’s Macquarie Radio Network (MRN) has been delayed and will not close until tomorrow.
The float was to have closed last week, but the deferral has been attributed to printing delays and the Easter break.
Less than a month ago, Singleton made a last minute decision not to proceed with a full public float, opting to go with a relatively small offering. The move ensures MRN, encompassing 2GB and 2CH, remains firmly under his control.
In a statement at the time, MRN said shares in the float would go only to ‘foundation’ investors, selected by the company.
The company said it would raise just over $3 million from the sale of 3.16 million shares at $1 each.
MRN also valued itself at $72.11 million after completion of the offer. This is at least $30 million less than earlier market estimates.
Before the defection of Alan Jones three years ago from 2UE, MRN was valued around the $50 million mark.
Singleton, the other major shareholder, Mark Carnegie, and Jones’ company, Hardiac, have agreed not to sell their shares for 12 months.
Macquarie Chairman, Max Donnelly, who has been getting the network ready to float, says listing on the Australian Stock Exchange and the initial public offering represent a natural progression for MRN’s business.
“It provides access to public capital markets, financial flexibility and a corporate structure that will allow MRN to pursue growth opportunities.”
He says only around $3 million was being sought because MRN is in a strong financial position.
MRN is forecasting earnings before interest, tax, depreciation and amortisation (EBITDA) of $7.8 million for the 12 months to 30 June, with revenue of just under $40 million.
That compares to EBITDA of $8.75 million and $43 million revenue in the previous year.
The projected revenue drop is attributed to “weaker than anticipated sales performance”, but “senior management and other staff changes have been made to the agency sales team and the directors believe that performance will improve in the mid to longer term.”
MRN will use $2.5 million of the offer proceeds to repay its debts to companies, controlled by Singleton and Carnegie, while the remaining $500 000 will cover float expenses.
MRN is scheduled for ASX listing on Friday week (15 April).
The move for a public listing was prompted by the deal Macquarie struck with Alan Jones. He was promised an annual salary of $4 million and an option to acquire 20% of 2GB over seven years.
Early last month, Singleton said: “The shareholders have an obligation that there will be a liquidity event or an IPO by a certain date.
“It seemed like a good idea to float it now.”
In terms of the money raised from floating 2GB and 2CH, media analysts say Macquarie’s expansion options are limited.
After last year’s unsuccessful Virgin joint venture – formed to bid for the three new FM licences in the eastern states – the analysts say prices of media stocks are high and there will be other more aggressive players in the market, intent on acquiring media outlets after cross ownership laws are relaxed.