Sale of Virgin Radio back on the agenda as potential suitors line up

SMG's plans to offload Virgin Radio appeared to be back on track this weekend, after the group confirmed it had received several approaches for the station from potential bidders.

The Scottish broadcaster announced plans to spin off the radio station last summer, claiming its preferred option would be a stock market flo-tation. However, the proposals were thrown into disarray after its chief executive at the time, Paul Jackson, defected to the rival Capital Radio in September.

The instability within both the group and the equity markets eventually forced the group to ditch the idea of a flotation, and while the company considered a trade sale of the business, it did not receive offers anywhere near its £80m target for the radio station. The highest offers were reported to have been in the region of £58m – a fraction of the £225m that SMG paid for the business, when it bought it from DJ Chris Evans at the turn of the millennium.

SMG issued a £91m rights issue in November to refinance its banking facilities – a move that helped ease the pressure of making a quick sale of the radio station. In the weeks since, it has received fresh approaches for Virgin Radio.

The group said yesterday that it was "exploring its options" for the station. It is believed to have hired Jefferies International, the boutique investment bank, to lead the sale process. Among the suitors believed to be interested in bidding for the group are the Guardian Media Group, Global Radio and the private equity outfit Vitruvian. Global, which is chaired by Charles Allen, the former ITV chairman, is also stalking GCap, the owner of stations such as Capital Radio and Classic FM.

In a statement released yesterday, an SMG spokesman said: "SMG has consistently said that Virgin Radio is non-core. Following a number of expressions of interest from various parties, SMG is currently exploring its options."

SMG has been trying to off-load Virgin Radio to focus on its television businesses, which include Scottish TV, and Ginger Productions. The group also owns the loss-making cinema advertising business, Pearl & Dean, which SMG is also keen to sell.

Shares in the company have collapsed over the past year, down more than 70 per in the last 12 months. The stock finished unchanged on Friday at 15.25p, giving the company a market value of £145m.