APN abandons US$250m 'junk bond' sale as investors baulk at terms

APN News & Media [NZX: APN], the Australasian media group looking at spinning out its New Zealand unit, has dumped plans to raise US$250 million in a note offering from US investors and is looking at others ways to improve its financial flexibility.

The Sydney-based company won't go ahead with a senior unsecured note offer to sophisticated US investors despite attracting significant interest, it said in a statement. APN planned to use to repay debt, diversify funding lines, and extending debt maturities. APN was assigned a sub-investment, or junk grade rating by the major three rating agencies after announcing the offer. Standard & Poor's assigned APN a BB rating with stable outlook, Moody's Investors Service a Ba2 with negative outlook, and Fitch Ratings a BB- on a stable outlook.

"While APN received significant investor interest in the proposed offering, this interest did not ultimately result in terms and conditions satisfactory to the company," the company said. "APN will continue to explore capital market opportunities that enhance the flexibility achieved in the recent refinancing."

The media group had already refinanced a new A$630 million banking facility in August, and plans an early redemption of $100 million of NZX-listed bonds this month. APN's next major maturity is in January 2018.

APN is looking to split out its New Zealand unit for possible listing on the NZX, retaining a 40 percent stake in the publisher of the New Zealand Herald newspaper and owner of The Radio Network.

An initial public offer of 60 percent of APN New Zealand would generate some A$308.6 million of gross proceeds, based on the carrying value of the unit. Of that, some A$169.4 million would be raised through the float, and a further NZ$150 million from a 'note payable' as a result of restructuring the New Zealand unit, according to the offer document for the note sale. The funds raised would repay A$241.6 million of APN debt, and A$67.1 million would be added to the media group's cash holdings.

APN's dual-listed shares fell 1.1 percent to 90 cents on the NZX, and last traded at 82 Australian cents.

(BusinessDesk)