The board of Est Media Holding will propose at the company's August 31 EGM the reduction and subsequent raise of registered capital in order to generate funds to pay debts, make acquisitions and improve the ratio between share capital and capital reserves, Est Media Holding told MTI on Monday
Est Media said it is in talks with several outside investors regarding both the above measures as well as the company's reorganisation plan on the whole, though these talks have not resulted yet in binding contracts.
The measures, and the other parts of the planned reorganisation, would enable the group to raise revenue to HUF 8.261bn by 2016 from HUF 6.3bn planned in 2012, and to increase EBITDA to HUF 1.423bn by 2016 from HUF 911m next year, according to Est Media estimates.
Est Media Holding reported on Sunday that the company would propose decreasing registered capital from HUF 6.851bn to HUF 1.37bn through the reduction of the nominal value of company shares from HUF 1,000 per share to HUF 200 per share.
That step would affect only the composition of shareholders' equity without changing its size, the company noted, adding that increasing capital reserves was part of the reorganization plan adopted at an EGM on June 24.
Shareholders would also elect new members to the board of directors and authorise the board to raise registered capital at the August 31 EGM.
The EGM would be authorise the board to raise the company's registered capital by between HUF 2bn and HUF 4bn through the private placement of new Est Media shares at or above nominal value.
Part of the capital raise would be in cash to pay off part of debt to suppliers and/or loans debts, part would swap debt to suppliers into shares, and some would serve to make acquisitions, to a combined value of about HUF 2bn.
In terms of acquisitions, Est Media Holding plans to close the acquisition of event organiser Sziget Kft without raising its stake pursuant to original plans (which would require the payment of more than HUF 2bn), and at the same time keeping Sziget fully consolidated. This would require the purchase of a smaller additional stake, which would give the group 51% of voting rights in Sziget. The other owners of Sziget are ready to guarantee a minimum of HUF 180m in dividends per year between 2011 and 2015, thus helping Est Media group to manage its loan stock, the company said.
With regard to the group's traditional programme-guide business, Est Media plans to complete the purchase of EXIT Magazin in Hungary and acquire the Septe Seri and Programata periodical groups in Romania and Bulgaria, respectively.
Est Media plans to refinance any bank loan, and short-term loans (owed to UniCredit Bank and Wallis Asset Management) remaining after spending the equity raise's proceeds, using, as at present, the group's stake in Sziget, or the dividend due from the stake, as a collateral.
Est Media Holding, which was known as econet.hu until earlier this year, is an A-category issuer at the Budapest Stock Exchange.The company sustained losses of HUF 224 million on revenue of HUF 549 million in the first quarter of 2011, compared to losses of HUF 157 million on revenue of HUF 670 million in Q1 of 2010.