News blog
UBC Media
- BY: Andrew Hore |
- POSTED: 02/02/2009 |
It appears that UBC Media will finally sell its commercial division but it won’t get as much as it originally agreed unless the future revenues of the business recover.
Radio services provider and programme producer UBC first announced the potential sale of its commercial division in May 2008.
Nasdaq-listed Global Traffic Network Inc is paying £9m upfront plus £5.5m in deferred consideration depending on revenues in 2009. Revenues have to be at least £11m to trigger any deferred consideration and £13.6m for the full amount to become payable. UBC will also receive 50% of 2010 revenues in excess of £12m and 50% of 2011 revenues above £12.5m.
The commercial division generated revenues of £11.5m in 12 months to March 2008 and £4.64m in the six months to September 2008. Since then UBC has signed a two year deal with Global Radio.
UBC believes that the price of the disposal is a good valuation for the business, particularly as its revenues have been declining. There may be very little deferred consideration payable given the tough markets although the Global Radio deal will help. If advertising revenues recover in 2010 and 2011 then there could be more chance of deferred consideration.
UBC chief executive Simon Cole has been required by GTN to sign a non-compete agreement. He will be paid £30,000 from UBC for this. UBC will also indemnify Cole for up to £200,000 of any legal fees related to any claims under this non-compete agreement.
UBC chief operating office John Quinn will move to GTN and, because of his crucial input to the deal, he will receive a bonus of up to £160,000.
GTN was originally going to pay £15m for the business but this was subsequently changed to £11m in cash plus deferred payments of up to £5.5m on the commercial division‘s turnover in the 12 months following its sale.
The deal gives GTN the contracts to supply travel news and other information to 230 radio stations and over 700,000 radio advertising spots per year.
The sale is expected to be completed on 1 March 2009.
UBC plans to use the cash to acquire businesses that complement its radio programme production and data services operations.
There was £2.5m in cash in the balance sheet at the end of September 2008.
The share price recovered 0.375p to 3.75p a share, which values UBC at £7.23m. That is less than the pro forma cash that UBC should have when the deal goes through. However, UBC is losing money so there will have been a cash outflow since September.
© 2024 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
- Browse by issue
- All issues
- Popular tags
- All tags
- AIM Micro feeds
Keep up to date with articles published at AIMMicro.com. Subscribe to AIM Micro RSS Feeds
|