ZMCL promoters to pump Rs 500 cr into Big FM acquisition

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The promoters of Zee Media Corporation Ltd (ZMCL), led by media baron Subhash Chandra, will pump in Rs 500 crore to enable the company to acquire Anil Ambani’s FM radio business under the brand name 92.7 Big FM.
The board of ZMCL at its meeting on Thursday granted in-principal approval to avail secured loans up to Rs 500 crore from promoter company Arm Infra & Utilities to fund its acquisition of Reliance Broadcast Network’s (RBNL) FM radio business.
As reported earlier, ZMCL will acquire 49 per cent stake in Big FM. It will have a call/put option to buy the remaining 51 per cent after the lock-in period which ends in 2018.
The enterprise value of RBNL’s radio business is Rs 1,592 crore, which means that ZMCL has to pay Rs 780.08 crore for the 49 per cent stake.
As per MIB licence conditions, FM radio companies cannot sell more than 49 per cent before three years from the operationalisation of the licence.
The board of ZMCL had met on Thursday to review various funding options for the radio business being acquired by the company from RBNL.
“The board of directors of the company at the meeting held today had granted in-principle approval for availing secured loan of up to Rs 500 crore from M/s Arm Infra & Utilities Pvt Ltd, one of the promoters of the company,” the company said in a statement to the BSE.
The board also approved a notice seeking shareholders’ approval for certain proposals by way of postal ballot/e-voting.
As per the deal between ZMCL and RBNL, the latter will transfer 45 operational and 14 new, non-operational licences to newly incorporated special purpose vehicles (SPVs) Vrushvik Entertainment Pvt Ltd (VEPL) and Azalia Media Services Pvt Ltd (AMSPL), respectively, through business transfer agreements.
ZMCL will acquire 49 per cent shares in VEPL and AMSPL and will have a call and put option respectively for balance 51 per cent after expiry of the lock-in period. The transaction is expected to close in the first half of 2017.
According to ZMCL, the FM radio business will add diversity to its business by ensuring presence across different media vehicles. It will also lead to increased audience reach, thereby enabling engagement with advertisers both at national and local levels.
By acquiring an established radio network, the company will have access to a large ready radio network which will cut the gestation period to build from scratch.
The company also feels that the acquisition will help it in expanding the regional base besides exploiting synergies on content and ad sales. The high operating margins of radio business will contribute to sound financials.
The consolidated revenue of ZMCL and RABNL’s FM radio business stood at Rs 740 crore while the EBITDA was Rs 194 crore. ZMCL’s revenue in FY16 stood at Rs 435 crore while EBITDA was Rs 78 crore. RBNL’s radio business revenue was Rs 305 crore while EBITDA was Rs 116 crore.
ZMCL will account for 49% of 92.7 Big FM results in FY 18 for VEPL & AMSPL and 100% in FY 19 for VEPL (once the call/put option is exercised) subject to regulatory approvals.

ZMCL promoters to pump Rs 500 cr into Big FM acquisition | TelevisionPost.com
 
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