SPH media restructuring: Privatisation, sale options considered but not viable

VARIOUS options were exhausted before the proposal to restructure Singapore Press Holdings' (SPH) media business was made, SPH's chief executive Ng Yat Chung has said.

Speaking at a virtual dialogue organised by Sias, or the Securities Investors Association (Singapore) to address shareholder queries on Thursday evening, he said that options such as privatisation or selling the media business had indeed been considered.

However, any party that takes over the media business will be subject to the same challenges the company is facing in the media landscape, particularly the secular decline in print advertising revenue. Being in a commercial company whose shareholders expect a fair return was therefore not viable for the media business, said Mr Ng.

Transferring the entire media-related business to a company limited by guarantee, or CLG, will allow profits to be reinvested in the company rather than being distributed to shareholders.

"So this is how we came to a solution that requires us to find a sustainable future for the media business," he said. He added that the CLG model will present more opportunities for the business to raise funds.

SPH, which publishes The Business Times, had announced in May that it will transfer its entire media-related business to a CLG. The move was the result of a strategic review announced in March, amid structural changes that had severely disrupted the traditional business model, which had relied on print advertising revenue.

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With the loss-making media business hived off, SPH is expected to benefit from its non-media assets, prompting queries as to why a "profitable business" should be handed over to Keppel Corporation.

Keppel had made a S$2.2 billion bid to privatise SPH's non-media business. The deal, which values SPH at S$3.4 billion, will take place through a scheme of arrangement, subject to SPH shareholders first approving its media restructuring plan.

Under the scheme, SPH shareholders will receive a total consideration of S$2.099 for each SPH share they own. This will consist of cash of S$0.668, 0.596 Keppel real estate investment trust (Reit) unit (valued at S$0.715) and 0.782 SPH Reit unit (valued at S$0.716).

Mr Ng said that while there is a plan to grow the non-media business on its own, the company had gone through the process of evaluating over 20 offers for its non-media business in order to get the best value for shareholders.

Addressing queries on Keppel's offer, Mr Ng said that while he understands that an all-cash offer may be favoured, none of the offerors had proposed such a deal.

SPH had said that the offer price of $2.099 per share represents a premium of about 40 per cent based on the last trading price before the announcement of SPH's strategic review on March 30.

Shareholders will also get to benefit from steady dividend yields in the 4 per cent range, based on the historical averages, for SPH Reit and Keppel Reit.

SPH will hold a virtual extraordinary general meeting at 2.30 pm on Sept 10 to seek shareholders' approval on its proposed restructuring and formation of a new constitution.

Shares of SPH ended Thursday at S$1.95, up S$0.02 or 1 per cent.