UTV’s rights go wrong

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With underwriters forced to take up almost 60 per cent of UTV Media’s £49.9m ($100m) rights issue, analysts warned other media companies that this route to improving their balance sheets was in danger of closing altogether.

The issue, announced on June 4 on a two-for-three basis at 130p a share, was fully underwritten by Numis and Goodbody stockbrokers in Dublin but only 41.5 per cent was taken up by existing shareholders.

In a statement, the company said on Tuesday: “The joint underwriters will be seeking subscribers for the remaining 22,451,588 rights issue shares for which valid acceptances were not received.

“Substantially all of the remaining rights issue shares have been sub-underwritten by institutional investors.”

The issue, aimed at reviving UTV’s balance sheet, followed similar moves by other media companies, notably the company formerly known as SMG, now Stv, which like the Ulster broadcaster holds ITV franchises. But unlike UTV it is divesting its radio interests.

Grant Goddard, radio analyst for Enders Analysis, said: “The market has changed substantially in recent months and this sort of result will mean that potential underwriters will be extremely wary of offering to support rights issues from media companies.”

However, UTV did receive a vote of confidence from the Irish venture capital fund TVC Holdings, which became the largest shareholder after taking an 11 per cent stake in the Belfast-based radio and television broadcaster.

Shares in UTV closed down 5½p at 123p.

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