Trinity Mirror says disposals deadline on track
LONDON (Reuters) - British newspaper group Trinity Mirror (TNI.L) said on Wednesday its disposals drive was on track to be wrapped up by next week, despite a newspaper report that it might pull sales in the wake of reduced offers.
"We have always said the process would be completed by the end of the third quarter. We are not commenting on any speculation," a Trinity Mirror spokesman said.
This means Trinity will update the market by September 28.
His comments came after a report in the Times published on Wednesday said Trinity was considering abandoning the sales of the Racing Post and its newspaper titles in Birmingham, central England, after buyers for both submitted reduced offers.
If Trinity decides to keep the assets it would be the second time in 17 months a major sale of UK regional newspaper assets has been called off. Daily Mail & General Trust (DMGO.L) decided to keep its Northcliffe regional newspaper division in February, 2006, after deciding the three bids it had were not good enough.
Analysts noted that DM>'s shares fell 15 percent when that disposal fell through.
Shares in Trinity, owner of the Daily Mirror tabloid, fell to five-month lows in August when the company said the money it gets from selling a tranche of its print assets would be less than anticipated.
At 6:30 a.m. EDT, shares in Trinity were down 0.3 percent at 439 pence, near their lows for the session having earlier traded as high as 458 pence.
"Trinity Mirror's current imperative is to complete the disposal program without further erosion of expected proceeds," Seymour Pierce media analyst Charles Peacock said in a sector note on Wednesday in which he said newspaper publisher valuations were at relatively low levels despite a gradually improving trend in advertising.
When Trinity posted interims on August 2 it said it expects sale proceeds of around 450 million pounds ($907 million), well below the 600 million-plus figure analysts initially expected.
"The severity of the current tightening of credit raises some questions whether even the 450 million pounds will be achieved in total, particularly if some of the preferred bidders rely on leveraged structures to finance their offers," Peacock said.
The Times said Trinity's progress on the disposals drive has been hampered because Chairman Ian Gibson is also a senior independent director at Northern Rock NRK.L, which is battling a crisis that has led to Britain's worst bank run in decades.
Earlier this month, Gibson joined Wm Morrison Supermarkets Plc (MRW.L) as non-executive deputy chairman. He will become chairman of Britain's fourth-biggest supermarket group when founder Ken Morrison stands down sometime before March. Gibson is also a director at Greggs (GRG.L) and GKN (GKN.L).
JP Morgan cut its price target on Trinity on Wednesday to 480 pence from 508p and held its "neutral" rating, partly due to the anticipation of lower-than-expected net disposal proceeds.
The broker has downgraded its longer-term national newspaper forecasts to reflect the ongoing threat in the highly competitive UK tabloid market, which is dominated by The Sun, Britain's biggest-selling daily newspaper.
JP Morgan's Gareth Davies said this month's move by Rupert Murdoch's News Corp. NWSa.N to cut the price of the Sun by 15 pence to 20p in London and southeast England was "bad news" for Trinity's Daily Mirror.
Interest in Trinity's disposals comes as media group Emap EMA.L assesses bids for its magazines and radio assets. The company is considering a break-up or possible demerger.
Sources familiar with the situation have said Emap has had more than 20 potential approaches from trade and private equity buyers.
An update on the level of interest Emap has attracted may come Sep. 27 when the company gives a trading update ahead of a scheduled update on the bidding process and strategy on November 13.
