Southern Cross Media, owner of Australian regional radio and tv stations, has offloaded the debt burden of its American regional newspaper assets that were acquired when the company was owned by Macquarie Bank.

In 2007 Macquarie Media, as it was then, paid a total of $360 million to acquire a number of regional American newspaper companies, but the timing was not right and as the country went into recession regional publishing revenue fell and fell. Macquarie Media and later Southern Cross Media had to pump more money into the businesses and a number of American banks were also owned money.

This week’s decision, to get out of the US newspaper businesses and hand them back to the banks, which were owed US$ 134 million, is a sensible move for the company. The banks now have 100% control and 90% of non-voting equity, with Southern Cross Media retaining 10% of non-voting equity.

Southern Cross Media has written down the value of its investment in the US newspaper businesses in each of its recent annual reports and the timing of this latest move has been well handled to maximize end of financial year benefits for ditching the poorly performing investments. It has removed the US$ 134 million debt from its books and allows the company to concentrate on its Australian radio and tv businesses, which are performing steadily in tight times under the leadership of CEO Rhys Holleran.

Southern Cross Media’s share price has been steadily falling in recent months from around a $2 per share price tag in January to sit at about $1.65 per share this week, mostly as a result of overall market declines, but also because of worries about whether the US newspapers would suck out more money from the company. This latest move should cause the share price to recover a little.

Southern Cross Media Group is now “released from all claims attached to the [debt] facility,” according to an announcement made to the stock exchange on the day the financial year ended.