Private Frazer’s Doomed Magazines

June 3, 2008

Buddy can you spare £3/4 billion?

Filed under: B2B magazines,figures,Uncategorized — privatefraser @ 8:53 am
Tags: ,

The RBI sale is obviously going wonderfully well. According to a report in the Telegraph the company is trying to put together a £750m loan to anyone that will buy the company in one piece. Given that the asking price for the whole package is £1.25bn it means that if anyone does want to buy the group they will only have to find £500m of their own (or, more likely, further borrowed) cash.

Of course it’s one thing to insist on the sale taking place in one bundle, but I imagine it will be difficult to insist that every magazine and every division remains intact after the sale. The opportunity obviously exists for someone to borrow the money from Reed to buy RBI and then sell off parts of the business (this used to be called ‘asset stripping’) to pay off the money borrowed.

This new plan might be thought to run counter to what Sir Crispin Davis the RBI CEO said at the start of the sale process, “Our approach is that we’re not going to be rushed into it … we do think there will be a wide and strong level of interest in this business.” They seem to have got to the point where ‘not being rushed’ becomes ‘won’t someone please take this off our hands’.

Given the state of the economy on both sides of the Atlantic and the ongoing credit crunch, not to mention the underlying problems of a print-based, advertising-driven model, the longer the process takes the more likely it is that the value falls or the inducements rise. Private Frazer is waiting for Reed to lend someone all the money needed to buy all of RBI. Failing that I’ve checked down the back of the sofa and found half a crown and a nuttall’s minto – if anyone has Crispin’s email I’ll get my bid in.

The Business Media Blog has another take on this process.

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