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August 7, 2011 5:58 pm
Guardian Media Group and Apax Partners, the private equity group, are to share a £100m special dividend from Trader Media Group after a debt refinancing deal at the classified advertising publisher.
GMG and Apax each own half of the Auto Trader publisher, for which they had explored an initial public offering or sale this year.
After deciding against such a decision in the near term, Trader Media announced a £150m loan extension in June. Those funds are to be split evenly between Apax, GMG and Trader, according to people close to the companies, within the coming weeks.
For GMG, the £50m cash will provide a much-needed boost to its investment fund, which is designed to diversify the group’s portfolio away from its mainstays, newspapers and radio.
Guardian News and Media, the newspaper publisher that is owned by GMG, last week reported a pre-tax loss of £43.1m in the year to the end of April, in part due to exceptional costs to cover restructuring.
Revenues at GNM fell 10.3 per cent to £198m, although losses narrowed on the prior year. In June, Andrew Miller, GMG’s chief executive, began a £25m cost-cutting programme, with “significant” redundancies expected at the newspaper.
Its print business faces structural decline in advertising revenues, particularly by recruitment ads, and has proven a drain on GMG’s cash reserves. The value of the group’s cash and investments fell by 24 per cent to £197.4m in the last year.
A special dividend will enable GMG, which is owned by the non-profit Scott Trust, to bolster its hedge against continuing losses at the newspaper business.
GMG itself swung from a loss of £171m to a pre-tax profit of £9m in the last year, including Trader Media and Emap, the business-to-business publisher in which it holds a 33 per cent stake.
Trader Media will retain £50m of the refinanced debt to support its own growth. The group is often touted as one of the more successful examples of a print publisher shifting to the internet, with 85 per cent of its £120.1m operating profit (before exceptional items) generated by digital sources.
Its Auto Trader brand has recently made a marketing push into mobile, attracting more than 1m downloads of its iPhone app.
Trader Media and GMG declined to comment. Apax did not respond to a request for comment.
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