- March 3, 2004
- Posted by: admin
- Category: Media & Broadcasting
CAPE TOWN Media group Primedia and its black empowerment partner, the Mineworkers Investment Company (MIC), have increased their stake in lucrative Gauteng radio station 94.7 Highveld Stereo in a deal that boosts Primedia’s empowerment credentials at the same time. The media group is close to finalising more acquisitions, including New Africa Investments Ltd’s (Nail’s) stake in KFM, the biggest regional radio station in Western Cape, and in the Gauteng-based Kaya FM.
In the light of proposed changes to media ownership regulations by industry regulator Icasa, which relax limits on the number of radio stations a company may own, the deals position Primedia as a huge force in the sector it is growing its radio assets and moving into a less regulated broadcasting environment with a strong balance sheet.
Primedia CEO William Kirsh said the deal was a significant empowerment step as the MIC would be invested in an additional R80m of value in Primedia and Africa On Air, the company that owns Highveld, R30m through shares and R50m through its direct stake.
Primedia already has an 55% economic interest in Highveld Stereo, but the station’s contribution to Primedia’s operating profits has been diminishing in the past few years as the empowerment financing structure put in place several years ago meant that minorities were earning an increasing share of the station’s profits.
As a result of the latest deal, Primedia will be able to book 85,8% of Highveld’s profits from January this year.
Hosken Consolidated Investments (HCI) has agreed to sell its 42,5% stake in Highveld to Primedia and the MIC for R180m. Primedia will pay R129m for 30% of the station and the MIC will pay R50m for 12% of it, increasing the MIC’s stake from 2,2% to 14,2%.
In part payment for the deal, Primedia will issue shares to HCI, which will in turn renounce them to the MIC for R29m.
There is also a put and call arrangement between the MIC and Primedia for the MIC’s direct stake in Highveld, which could ultimately result in the MIC holding its interest in Highveld indirectly, through Primedia.
As a result of the deal, the MIC’s stake in Primedia rises 50% to an economic interest of 7% and a voting interest through a joint voting pool agreement of about 42%.
Primedia is also finalising talks on the purchase of Nail Outdoor for R218,5m.
Source: Charlotte Mathews – Business Day