SPH shareholders say aye in historic vote to hive off media business

SHAREHOLDERS of Singapore Press Holdings (SPH) have voted in favour of a proposed restructuring, which will result in the group's media business being transferred to a company limited by guarantee (CLG).

During the extraordinary general meeting (EGM) on Friday, 97.6 per cent of votes were in favour of the first resolution for the proposed restructuring of the media business.

Shareholders of the property and media group also supported the second resolution for the conversion of SPH's management shares into ordinary shares, as well as for the adoption of a new constitution, with 97.5 per cent voting in favour.

Around 369 million shares were represented by votes cast at the EGM on Friday. SPH had around 1.59 billion ordinary shares and 16.4 million management shares in issue as at Aug 11.

With the shareholders' approval obtained, the media business restructuring is expected to be completed by December. This paves the way for the proposed privatisation of SPH by Keppel Corporation, as completion of the media restructuring was one of the conditions that had to be fulfilled.

SPH chairman Lee Boon Yang thanked shareholders for their loyal support for the restructuring.

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"SPH Media now has a solid foundation to create a new future for journalism in Singapore," he said. "When this restructuring is completed, I am confident that they will succeed in their mission to provide the best possible media service and content to their audience at home and abroad."

SPH Media Trust chairman-designate, Khaw Boon Wan, said he welcomed SPH shareholders’ decisions, as the current business model is “not sustainable”.

"Delisting the media business is however only a first step, but a critical one," he said. "As a CLG, we will do our utmost to carry out the mission of providing quality journalism for Singaporeans. We want high quality products which are relevant to our readers, to help them make sense of the world."

SPH, which publishes The Business Times, announced a strategic review in March to consider options for its various businesses.

It announced the first step in May: a proposed transfer of its loss-making media business to a CLG, SPH Media Trust, amid the ongoing challenge of falling advertising revenue.

The transfer includes relevant subsidiaries and employees; the News Centre and Print Centre, along with their respective leaseholds; as well as all related intellectual property and information technology assets.

SPH will provide the initial resources and funding by capitalising the media business with a cash injection of S$80 million, and S$30 million worth of SPH shares and SPH Reit units.

SPH had said running the media business under the current listed company framework is "not feasible", with losses in SPH's media business likely to "continue and widen".

The CLG structure will allow any future profits from the media business to be reinvested into the media operations rather than be distributed to shareholders. It will also allow the media business to seek funding from a range of public and private sources with a shared interest in supporting quality journalism and credible information, SPH added.

Ahead of Friday's EGM, shareholders had raised questions on why the board did not consider selling or shutting down the media business.

SPH said in a written response on Thursday that winding up the media business may incur "potentially heavy financial costs", and any sale of the media business would also require regulatory approval.

"Given the role of the media business in providing a public good and the critical role it plays in the provision of quality news and information to the public, winding up is not an option," SPH said.

The company added that "all options for the media business require approval from the regulator, and the regulator has supported this option".

During the EGM, SPH chief executive Ng Yat Chung acknowledged it was a "difficult proposal", but said shareholders can also focus on the future.

"The idea is to hand over the responsibility for funding future requirements for the media business for a one-time hit," he said.

"It is also the fact that we can free ourselves from being regulated under (the Newspaper and Printing Presses Act)," he added, noting that SPH will have greater flexibility to tailor its capital and shareholding structure to pursue various strategic options across all its other businesses, which can potentially unlock and maximise shareholder value.

The second step of SPH's strategic review - announced last month - is a proposed privatisation of SPH. Keppel has 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 completion of the media restructuring.

The proposed privatisation is also subject to approval from both Keppel and SPH shareholders in the coming months, with the deal expected to be completed by December.

SPH shares closed flat at S$1.94 on Thursday, before a trading halt was called on Friday morning.