'Sunday Sport' publisher catches the eye of potential bidders

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The Independent Online

Suitors are ogling the assets of the Sunday Sport's publisher Sport Media Group, as it revealed yesterday that it had received "a number" of approaches over a potential takeover.

This comes as welcome news after the group admitted it still had not been able to renegotiate its debt facility, despite the deadline fast approaching. The group, which has suffered a traumatic 15 months since it was created through a reverse takeover, told investors of the approaches for all or part of the group yesterday.

The announcement caused shares in Sport Media Group to jump by 44 per cent, or 1p, to 3.29p.

Sport Media Group said in a statement to the Stock Exchange: "Following a number of unsolicited approaches, the board is exploring all opportunities to sell the business, in part or whole." It added that there could be "no certainty that any sale of the business will proceed or that an offer will be made for the company or as to the terms on which any such offer might be made".

It added that it had not agreed with its bankers on renegotiating its debt. It has a deadline of 6 March for a new facility.

At the beginning of January, Sport Media Group admitted it had breached a banking covenant, and was locked in talks with bankers on refinancing its debt. The group added that it was also considering alternative plans for funding. The announcement sent its shares tumbling 40 per cent.

Yesterday, the board said the talks were ongoing but that it "remains optimistic that an extension to facilities can be achieved".

Sport Media Group publishes the Sunday Sport and the Daily Sport as well as providing content delivered over the internet and mobile phones. It has struggled since it was bought by Interactive World in a £50m reverse takeover in September 2007. In April, it launched a £1m redesign which flopped with its readers, and circulation has fallen ever since. In June, it warned on profits for the second time in two months. It made a pre-tax loss of £18.2m in the year to July.

The credit crunch has had a particularly devastating effect on the media sector. Publishers have been forced to cut costs and lay off staff on falling circulation and a drop in advertising revenues, while the sector has also been hit by a rise in newsprint costs.