MCI expresses support for SPH's proposed restructuring

Published Thu, May 6, 2021 · 06:43 PM

THE Ministry of Communications and Information (MCI), which regulates Singapore Press Holdings (T39 : T39 0%) under the Newspaper and Printing Presses Act (NPPA), on Thursday indicated its support for the media and property group's proposed restructuring.

SPH, which publishes The Business Times, had announced on the same day that it will be transferring its media business to a not-for-profit entity - a move that comes as part of a strategic review announced in March. SPH said that it had approached MCI with a restructuring proposal to put the media business on a "long-term sustainable financial footing".

The plan entails transferring the entire media-related business of SPH to a newly incorporated wholly-owned subsidiary: SPH Media Holdings. SPH Media will eventually be transferred to a new public company limited by guarantee (CLG). Unlike companies, CLGs do not have share capital or shareholders.

Profits from the media business will thus be reinvested into media operations rather than distributed to shareholders.

In a statement on Thursday, MCI said that the government is prepared to provide funding support to the CLG to help SPH Media accelerate its digital transformation and build capabilities for the future.

It added that it agreed with SPH's assessment that the increasingly challenging media business model within a listed company structure is not viable. "Our goal is to help the local news media and our journalists adapt and thrive in the digital era, while maintaining the high professional standards we expect and value," said the MCI.

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"The government is also prepared to provide SPH Media with funding support, with fiscal discipline and accountability for outcomes in areas like digital innovation and capability development, as part of a long-term sustainable business plan," it added.

The MCI will deliver a ministerial statement on this subject at the next session of Parliament on May 10.

SPH disclosed in a statement that the MCI has also given its in-principle approval for the shareholding and other relevant restrictions under the Newspaper and Printing Presses Act (NPPA) provisions to be lifted from SPH upon the closing of the proposed restructuring.

Without NPPA restrictions in place, the listco will have the flexibility to "restructure its capital and shareholding a way that is better optimised" for shareholders, said Lee Boon Yang, chairman of SPH in a press conference.

This will also enable it to seek more business opportunities, explore ways of further unlocking value for shareholders and provide them with better returns in the following years, he added.

Under the NPPA, no person shall - without the approval of the MCI - become a substantial shareholder of SPH, nor enter any agreement or arrangement to act with any other person with respect to the acquisition, holding or the exercise of rights in relation to more than 5 per cent of the firm's shares.

The Creative Media and Publishing Union (CMPU) said in a separate statement that its members were feeling unsure about how this announcement might impact their livelihoods. The union is thus assuring its members that the announcement has no impact on the existing arrangements or agreements between CMPU and SPH. The collective agreements between SPH and CMPU remain valid, it said.

"CMPU will continue to ensure that its members are treated fairly and will continue to negotiate for fair employment terms and conditions, which include negotiation of bonuses and annual increments, should there be a need or when circumstances develop," said the union.

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