BERLIN (Reuters) – ProSiebenSat.1 Media PSMGn.DE is making a recovery that will enable it to reduce its debt burden without having to speed up an initial public offering of its online dating business planned for 2022, CEO Rainer Beaujean told Reuters.
Although the Munich broadcaster reported its first rise in core earnings in 2-1/2 years in the third quarter, sending shares 12% higher, the coronavirus pandemic has stretched its leverage ratio to an uncomfortable 3.7 times.
Beaujean forecast net debt would fall to 2.1 billion euros ($2.5 billion) by the end of the year from 2.5 billion euros at the end of the third quarter.
He plans to refinance most of ProSieben’s loan book but will repay 600 million euros in senior notes from financial reserves when they fall due next April.
Promoted to steady the ship in the spring after predecessor Max Conze’s acquisitive reign ended in boardroom acrimony, Beaujean has sold off a couple of smaller units to strengthen ProSieben’s finances.
He has carved out the group’s recently-expanded dating franchise into a separate division, called ParshipMeet Group, positioning it as a growth play that would command a premium to beaten-down entertainment stocks.
Asked in an interview whether he would consider bringing forward the IPO, Beaujean said: “2022 is the goal because we need a full year (of results) as a comparison. We will definitely not go before Dec. 31, 2021.”
With ParshipMeet earning between 100 and 120 million euros in EBITDA a year, and applying a multiple of 35 to ProSieben’s acquisition of Meet Group earlier this year, the ‘stub’ value of the rest of the business would be negative.
“If you look at a sum-of-the-parts valuation, entertainment would be worthless,” Beaujean said, adding the dating IPO would show the value locked up in the business. ProSieben’s market cap was 2.3 billion euros at Wednesday’s close.
ProSieben would retain its majority stake in ParshipMeet while co-investor General Atlantic is expected to exit following the IPO.
NO MERGER TALKS
Beaujean dismissed merger speculation linked to Italian broadcaster Mediaset MS.MI, which has disclosed a stake of around one-quarter in ProSieben.
The actual direct interest it reported to the German company’s annual general meeting was, however, less than 11%, Beaujean said. Private equity house KKR KKR.N and Daniel Kretinsky’s Czech Media Invest (CMT) have also built up stakes.
“There are no talks with Mediaset, CMI or KKR,” said Beaujean.
ProSieben’s debt covenants include change-of-control clauses that would allow creditors to call in their loans in the event of a hostile takeover. This means that any suitor would need to be able to buy its debts to pull off a deal, Beaujean noted.
Additional reporting by Klaus Lauer; Editing by Michelle Adair and Keith Weir