Sir Anthony O'Reilly's Independent News & Media (IN&M) will retain first call on the shareholding of private-equity groups Providence and Carlyle in APN after their takeover of the Australian media group. Excluding debt, the transaction values APN at €1.93 billion on a fully-diluted basis.
The deal is still subject to an egm of IN&M shareholders on May 18th, but documents circulated to investors in advance of that meeting show that the bid partners have agreed a four-year lock-in at APN if the deal goes ahead. APN shareholders will vote on the deal on May 25th.
One partner can exit APN before the lock-in expires, but only with the approval of the other two partners. While there is provision for an exit mechanism by way of a trade sale or initial public offering, IN&M has the right to purchase the shares being sold in such a scenario.
IN&M expects to realise at least €375 million in cash from the highly leveraged transaction in which it will simultaneously buy and sell APN shares. The group did not specify its intentions for money in the egm notice, but left the door open to use it for a variety of purposes.
"While these proceeds are intended to be applied with the objective of accelerating the group's expansion in its global markets, maximising shareholder returns, reducing debt and for general corporate purposes, neither the precise application of the proceeds nor the amounts available for these purposes has been determined by the board at this time".
The egm notice shows that IN&M's current 41.6 per cent interest in APN will be sold to the Luxembourg-based acquiring vehicle by a Belgian and a New Zealand subsidiary of IN&M. This structure was adopted for tax reasons.
IN&M will reduce its APN stake to 35 per cent after the deal, but will hold a voting interest of 39.3 per cent. Providence will hold 37.5 per cent of APN and Carlyle will hold 27.5 per cent.
IN&M told its shareholders that the transaction would enable it to "protect its stake in APN at a time when there is significant amount of market activity, largely stimulated by the liberalisation of media ownership restrictions . . . in media stocks in Australia".
APN is currently a subsidiary of IN&M. If the deal is approved, its operations will be treated in IN&M's books as those of an associate company.
