MacKenzie's Wireless Group float to raise £40m

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The Independent Online

Kelvin Mackenzie, the former editor of The Sun, yesterday launched the £200m flotation of his radio group to raise funds to for further acquisitions and improve its online presence.

The loss-making Wireless Group will be listed through a placing of new shares that aims to raise £35m-£40m. The pricing will take place on 17 May and shares will start trading on 25 May. The company is looking for an enterprise value of £170-£200m.

Mr MacKenzie, the man who brought the nation Topless Darts as head of the now defunct Live TV, would see his 7 per cent holding in the company worth up to £14m. He has put £1.5m into the venture.

"We've made some nice purchases (of other companies), but we still felt acquisitive. We didn't want to keep going back to our backers for more handouts. That's why we're coming to the stock market. The competition is not going to get any less. We've got to grow the company," Mr MacKenzie said.

The other major shareholders are Liberty Media, a subsidiary of AT&T, with nearly 30 per cent, and Rupert Murdoch's News Corporation, which has 20 per cent.

Wireless Group was originally Talk Radio, a station which played no music, that was bought by a consortium led by Mr MacKenzie for £23m in November 1998.

Since then, the company has bought two local radio groups, for a total of £69m, and turned its flagship national station Talk Radio into a sports-only offering called Talksport.

Mr MacKenzie said that the money raised in the float would be used for developing websites linked to its local radio stations, buying more licences and bidding for sports rights, such as football. It will also be used to pay down debt.

Daniel Kerven, an analyst at ABN Amro, said: "This (flotation) should do down well. They've got some good assets and even if it is loss-making, revenues are growing strongly. Because of regulatory constraints on competitors, it has a relatively clean run on acquisitions targets for the next couple of years."

Mr MacKenzie said that the Talksport station, which lost £12.1m last year, should be in profit in three years. WestLB Panmure, the investment bank advising on the flotation, has forecast group loses of £9m this year, on turnover of £30m.

Analysts said that the uncertainty surrounding the Wireless Group is how much they might have to pay for sports rights. "That makes the outlook difficult to model. These rights, especially for football, will be expensive," said one analyst.

The market views the growth prospects for radio to be good. In the UK, 4 per cent of all advertising spend goes on radio. That compares with 13 per cent in the US, leaving scope for it to more than double in size in the UK.