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Categories
| RAM Ratings positive on NSTP privatisation |
| Business & Market 2009 | |||
| Written by Joseph Chin | |||
| Wednesday, 21 October 2009 17:08 | |||
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RAM Ratings said on Wednesday, Oct 21 that it has a positive view of NSTP’s privatisation as it would strengthen Media Prima’s business profile. NSTP is the oldest newspaper publisher in Malaysia. It publishes three major dailies including Harian Metro which is one of the most widely circulated newspapers in the country. "The proposed corporate exercise will result in Media Prima holding the controlling stake in NSTP, which would allow Media Prima to leverage on the former’s capabilities and to derive synergistic benefits," said the rating agency. RAM Ratings said with the completion of the corporate exercise, the group’s more diversified media platforms would give an added advantage vis-à-vis the capture of a larger slice of the industry’s advertising expenditure. “Other than broadening its revenue base, Media Prima would also be able to gain immediate access to NSTP’s strong cashflow. In FY Dec 2008, NSTP generated RM83 million of funds from operations (FFO). Given its minimal debts, the Company registered a strong FFO debt cover of 1.79 times at the end of the period. "As such, we expect the Group’s debt-servicing ability to improve after the consolidation of NSTP’s financials,” said Kevin Lim, RAM Ratings’ Head of Consumer and Industrial Ratings. RAM Ratings expects Media Prima’s balance sheet to strengthen as it does not have to pay any cash for the transaction. Under the proposed privatisation plan, Media Prima, which currently owns 43.29% of NSTP, will purchase the remaining shares it does not already own at RM2. This will be satisfied by the issuance of 123.19 million ordinary shares of RM1 each in Media Prima at an issue price of RM2 apiece and one new free warrant in Media Prima for every five offer shares accepted. Upon the completion of the proposed privatisation, the group also proposes to issue up to 24.6 million new bonus warrants and RM150 million of redeemable bonds with 50 million detachable warrants. As these corporate exercises hinge on the successful privatisation of NSTP, their impact can only be assessed at a later stage. RAM Ratings also said Media Prima's privatistion of NSTP had no immediate impact on either the P1 rating of the group’s RM180 million Commercial Papers (CP) Programme (2007/2014) or the enhanced AAA(bg) rating of its RM170 million Bank-Guaranteed Medium-Term Notes (BG MTN) Programme (2007/2012). The enhanced rating of the BG MTN Programme, which has a stable outlook, reflects the irrevocable and unconditional guarantee from Malayan Banking Bhd that boosts the credit profile of the debt issue beyond Media Prima’s inherent or stand-alone credit risk.
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