Broadcaster Southern Cross Media Group today launched a $169 million equity raising as part of a series of actions, including cutting pay and staff, to get the company get through the fallout from the coronavirus crisis.
The company says advertising revenues are expected to be materially impacted by COVID-19 and to be down 30% in this quarter and in the first quarter of th 2021 financial year.
The cash from the capital raising, at a fixed price of $0.09 a share, will be used to reduce debt. The shares last traded at $0.165.
Net debt was $330.5 millioin at the end of December.
The company has also identified $40 million to $45 million in cost savings this calendar year, including staff costs and marketing spend.
Southern Cross has already cut 7% of its headcount and has mandatory pay reductions of 10% for all directors, executives, and employees earning over $68,000 a year.
It also expects to be eligible for the JobKeeper subsidy for 1,600 of its full time employees.
The company has cancelled the interim dividend, keeping $21 million cash. No final dividend will be apid this financial year final dividend will be paid and non expected in 2021.
“SCA believes these initiatives will provide the business with the balance sheet and a more efficient operating model appropriate for the current uncertain macroeconomic environment," says CEO Grant Blackley .
"The COVID-19 crisis is causing significant dislocation across advertising markets, but the fundamentals of SCA’s business remain sound.
"The initiatives announced today position us to trade through this crisis and rebound when the recovery phase begins.”
The company says advertising revenue for the nine months to the end of March is trading 10% down compared to the the same period last year.
"Forecasting of calendar year revenue is difficult in the current uncertain macroeconomic environment and the Company is not in a position to issue guidance," the coimpany says in a trading update.
"However, Q4 FY20 and Q1 FY21 advertising revenues are expected to be materially impacted by COVID-19 and to be 30% or more down on pcp."
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