SMG buying Virgin Radio float time

By Nick Goodway for MailOnline
Updated:

 

Virgin Radio owner SMG today bought itself more time for the delayed stock-market flotation of the station by launching a £95m rights issue that will slash its debt.

SMG's new chief executive Rob Woodward said the cash, which will cut borrowings to a more manageable £40m. meant that 'we will no longer be perceived as a forced seller of Virgin Radio'.

The group had hoped to float Virgin at £80m last month but the valuation slid after the late summer's credit crunch, and Woodward believes a float or sale should be done 'from a position of strength to maximise value'.

He has already promised shareholders they will receive all the proceeds from a Virgin sale through the most tax-efficient method possible.

After that, he aims to concentrate SMG on its ITV franchise north of the border, saying: 'The renewed success which ITV is enjoying in the South is being mirrored in Scotland.'

The rights issue is at a heavily discounted two-for-one shares at 15p against today's share price of 24¼p, down 4¼p.

It is fully underwritten by Hoare Govett, guaranteeing that SMG will receive the net proceeds of £91m whatever financial markets do over the next five weeks.

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