Seven West Media has halted trading on the ASX until Thursday as it seeks to raise $440 million to pay down debt amid continued weakness in the wider advertising market.
The company, which includes Seven Network, West Australian newspaper and Pacific Magazines, has announced the capital raising in order to combat a deteriorating advertising market and take pressure off its balance sheet. It will sell shares at $1.32 each, 19% lower than its close on Friday at $1.62.
SWM said it was raising capital due to “the continued weakness in the wider advertising market and broader global economic volatility.” It will use the proceeds of the offer to pay down debt, and expects net debt to fall from about $1.875 billion to about $1.442 billion post the raising.
Billionaire Kerry Stokes’ Seven Group Holdings and Kohlberg Kravis Roberts have “committed to participate for their full entitlements, and the remainder of the entitlement offer is fully underwritten,” Seven West said in a statement.
While SWM has not disclosed its debt covenant ratios, it is believed to be around the media industry average of four times net debt to EBITDA.
In June SWM announced its new CEO Don Voelte, with former CEO David Leckie taking on an executive role on the board.
Last month TEN halted trading to raise $200 million in capital to invest in programming and to “strengthen the balance sheet.”