Kelvin Mackenzie yesterday rescued his Wireless Group from a debt squeeze with the surprise sale of its leading local radio station to Scottish Radio Holdings for £18m in cash.
Mr MacKenzie, the chief executive, said the disposal of Southampton-based Wave 105 would enable The Wireless Group to pay its debts. The deal follows TWG's sale earlier this year of Scot FM to the Guardian Media Group for £25.5m.
"We are not content to be sellers of assets but uncertain capital market conditions meant we had to take this action," Mr MacKenzie said.
TWG raised a further £1m from the sale of its 25 per cent stake in Fife-based Kingdom FM, also to SRH. This leaves Mr MacKenzie's group with about £1m of cash in the bank, which a spokesman said ruled out the need for any further disposals.
Analysts said the price paid for Wave – nearly 40 per cent less than it was valued at last year when TWG acquired the station – was a sign of Mr MacKenzie's desperation. One analyst said: "The sale leaves them in a better situation than a bloody awful one. They were heading rapidly towards their revised banking facility limits and had to reduce their indebtedness down to £18.5m by the end of November."
TWG, which lost £34m last year following an aggressive expansion programme, said that it would retain a £12.5m revolving credit facility with Barclays Bank. It will be left with the national station TalkSport and 14 regional radio licences.
SRH's acquisition of Wave 105 marks its first major foray in the south of England in a move analysts said was strategically important for the Glasgow-based group. SRH, which broadcasts mainly in Scotland and Ireland, also owns CFM Radio, which is based in Carlisle.
Richard Findlay, SRH's chief executive, said that Wave, which is the regional radio licence holder for the south of England, was one of the most desirable UK regional licences.
"[The] area is historically popular with advertisers and is well placed to benefit from any lift in the advertising market," he said.
Wave made a pre-tax loss of £600,000 on turnover of just £1.6m in 2000, and had net liabilities of £300,000 at the end of last financial year.
SRH gained 5p to 827.5p while TWG was flat at 50.5p.Reuse content