Ten Network Holdings has finalized the sale of its outdoor advertising subsidiary, Eye Corp, to oOh!media, a company owned by CHAMP Private Equity, for a total of $145 million. The transaction includes all of Eye Corp’s operations in Australia, New Zealand, the United States, the United Kingdom, and Indonesia.
The deal is structured with an immediate cash payment of up to $120 million upon completion, and a deferred payment of $25 million, which is set to be paid three years after the deal closes. However, the final cash proceeds are subject to adjustments based on the sale outcomes of Eye Corp’s U.S. and U.K. operations, working capital levels, capital expenditure obligations, and transaction costs.
As part of the agreement, Ten Network Holdings will retain certain Australian contracts but will subcontract the operation of these assets to oOh!media. The net value of these retained contracts is estimated to be around $16 million.
The sale proceeds will be used by Ten Network Holdings to reduce its debt, strengthen its balance sheet, and increase its financial flexibility. Additionally, Ten plans to sell the U.S. and U.K. operations of Eye Corp to third parties. If a sale cannot be completed, the agreement provides Ten with the option to reacquire these assets.
This transaction comes after several months of negotiations between Ten and CHAMP, and follows Ten’s company-wide strategic review, initiated earlier this year. Eye Corp has faced financial challenges, with a reported 7% decline in revenues and a 36% drop in earnings in the first half of the 2012 fiscal year.
Following the announcement, shares in Ten Network Holdings saw a modest increase, closing 1.98% higher at $51.50, against a slight decline of 0.18% in the benchmark index.
