Photon's shareholders have voted to approve the marketing services group's recapitalisation plan, as CEO Jeremy Philips reveals the group is planning to "significantly" reduce its agency headcount before the end of the year.
The proposal will enable Photon to relieve immediate stress on its balance sheet. It will now be able meet the deferred consideration payments due this month and avoid being in breach of its debt facilities, which have been extended by three years.
The approval of Photon's recapitalisation plan also enables the group to undertake an equity raising to a minimum of $102.5 million.
Chief executive Jeremy Philips told shareholders Photon is currently “working on reducing the complexity of the group” and would undertake “more mergers to achieve simplification”.
This includes the merger of Bellamyhayden and Photon, but will also extend to other agencies at Photon within Australia.
In a briefing with journalists after the general meeting, Philips said: “As of June 1 there were around about 45 business units depending on how you cut it and we will reduce that significantly by the end of the year.”
Philips expects the reduction to be achieved through mergers, rather than closures or sales, but did admit Photon had received a number of inbound enquiries from rival groups about acquiring agencies, and did not rule out the possibility of selling agencies.
“From here on in, its not a priority, but nothing is off the table. We can't be closed minded to things but we have to focus on the right outcome for all our stakeholders and so we'll be pragmatic but asset sales is not part of the plan”, Philips said.
The former News Corp. executive only expects a “small number of redundancies” as part of "consolidations in the next few months”.
“Unfortunately
there will be a small number of redundancies but it is actually only a
small number and we're working hard to minimise that. It's not about a
headcount reduction, it's about efficiencies and simplification. It's
also a way of enhancing our capabilities for clients,” he said.
Philips said Photon was still planning to recruit three new independent directors, but the plan had been “put on the back burner” while it worked through its recapitalisation plan.
Yesterday, Photon confirmed BMF founder Matthew Melhuish will join Photon's senior management team in the role of head of Australian Agencies, as first revealed by AdNews.
Naked founder Jon Wilkins will also move into the newly created role of head of group development & strategy, taking charge of the International part of the business, with a mandate to drive greater collaboration between its agencies.
Photon's structure has been simplified into two groups; Australia and International, with the former including all domestic agencies and field marketing brands. International includes Naked, Frank, Hotwire, Retail Insight, The Leading Edge and a search marketing group.
At the meeting, chairman of Photon Brian Bickmore said it was “too
early” to have a strong indication on the full year result, adding that
July and August are budgeted to contribute a relatively small portion
of the year's total earnings in line with previous years. However,
Bickmore said to date revenue and EBITDA results are in line with last
year.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.