Mar 12, 2010
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ITV scraps plans for SDN multiplex sale

Tuesday, October 13 2009, 10:44 UTC - by Andrew Laughlin, Technology Reporter

ITV has scrapped plans to sell its digital terrestrial multiplex operator SDN and will instead raise £120m through a bonds issue.

In June, ITV hired Swiss investment bank UBS to broker the sale of Freeview operator SDN, which it acquired back in 2005 in a deal worth £149m.

Some experts believe that the sale of SDN, which is expected to exceed £40m in revenue this year, would have generated around £200m for ITV.

However, the broadcaster will now retain the operator as it offers "greater potential value for shareholders". It plans to use SDN as asset backing for the ITV pension scheme to reduce the deficit on a funding arrangement.

Talks are currently under way with pension trustees for this approach to go ahead. In conjunction, ITV will utilise £120m of convertible bonds to improve the strength of its balance sheet.

After he was yesterday named interim chief executive, former ITV chief operating officer John Cresswell said: "The actions that we are announcing today continue our work over recent months to strengthen the balance sheet, improve our debt maturity profile and proactively manage our pension deficit over the long-term.

"With the proceeds of the convertible offering, to date this year we will have raised over £225m of new borrowing with maturities ranging from 2015 to 2019 and without financial covenants.

"Seeking to deploy SDN as asset backing to the pension scheme will help us manage our pension risk, while continuing to benefit from the strong cashflows that business delivers. We believe it is the right decision for ITV, maximising value for shareholders."

Despite stressing that a recovery in the TV advertising market has not yet surfaced, Creswell also said that there is a clear trend for improvement into the fourth quarter of 2009.