News blog

Local Radio Company/Radio Investments

  • BY: Andrew Hore |
  • POSTED: 08/03/2009 |

Local Radio Company is raising up to £1.51m and changing its name to Radio Investments.

The 42-for-five open offer at 0.25p a share will raise £1.41m after expenses. Shares in LRC halved to 1p each on the back of this announcement. The current share capital is valued at £720,000.

Rival radio group UKRD and its chairman Trevor Smallwood own 29.5% of LRC and this open offer could be highly dilutive if they do not take up their entitlement.

Hallwood, a company associated with LRC chairman Anthony Gumbiner, will underwrite £865,000 of the open offer. If the proposed disposal of JazzFM takes place before the end of March 2009 Hallwood’s underwriting commitment will be reduced to £353,000. Hallwood already owns 28.3% of LRC. That could rise to nearly 78% if it takes up its own entitlement and the underwriting commitment.

Rhys Davies, an investment professional who is also a director of a Hallwood subsidiary, will underwrite £200,000 and Jason Bryant £20,000 of the open offer. 

LRC reported flat revenues on continuing activities of £14.7m in the year to September 2008. The loss on continuing activities was reduced from £7.9m to £5.61m. There was cash in the balance sheet of £566,000 at the end of September 2008 but cash is flowing out of the business and it is being restructured.

Radio appears to be one of the first media to suffer from a downturn in advertising. LRC’s revenues are currently down year-on-year. They are expected to decline by 6% in the first quarter of 2009 but that could be better than the UK independent radio sector.

The closing date for the open offer is 27 March 2009. 

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