(Updates with price confirmation, comment, details)
WELLINGTON Dec 17 Struggling Australian
publisher Fairfax Media Ltd has sold its majority stake
in New Zealand online trading company Trade Me
at a 5 percent discount as the company offloads assets to pay
down its debts.
Fairfax, Australia's oldest media firm, sold its remaining
holding of 202 million shares in the Trade Me for A$3.05 ($3.22)
per share to raise A$616 million, or NZ$767.5 million,
confirming weekend media reports about the expected sale.
Shares in Trade Me, New Zealand's most visited website and
one of the country's top 10 firms, closed on Friday at A$3.22 in
Australia and NZ$4.05 ($3.42) in New Zealand. Shares in both
Trade Me and Fairfax were halted on Monday.
"The proceeds from the sale will reduce Fairfax's net debt
and will provide us with a very strong balance sheet and the
financial flexibility to invest and to complete the company's
structural transformation," Fairfax CEO Greg Hywood said in a
Despite the discounted price, the sale represents a 79
percent profit for Fairfax, which has been selling assets and
slashing jobs at its flagship publications, including the Sydney
Morning Herald and the Melbourne Age, to shore up its balance
Fairfax paid NZ$750 million for Trade Me in 2006. It sold
down one-third of its stake in an initial public offering in
December 2011 and subsequently cut its stake to 51 percent
earlier this year.
"On the face of it, the price doesn't look that bad...
Certainly from an asset perspective, it was a jewel in the
Fairfax crown," said Bernard Doyle, executive director of JBWere
"There's well known issues in that part of the media sector,
so people aren't too cynical about the motives of the sale.
Fairfax's balance-sheet pressures are well known."
Fairfax publishes 400 metropolitan, regional and suburban
newspapers and magazines and owns radio stations.
In June it announced it would cut 1,900 jobs over three
years, close printing plants and reduce the size of its
broadsheet newspapers as its businesses has been pummelled by
declining advertising revenues.
Under massive pressure to reduce debt, the publisher has
sold stakes in profitable online ventures over the past year, as
they are considered the easiest parts of its business to sell.
Market participants expected many of the shares would be
placed with New Zealand institutional investors, providing a
welcome slug of liquidity to the country's NZ$64 billion equity
($1 = 0.9485 Australian dollars = 1.1857 New Zealand dollars)
(Editing by John Mair)