Seven West is hoping to take a big chunk out of its $1 billion debt pile by issuing up to $612 million worth of new shares to investors.
Kerry Stokes' media group, which owns the Seven TV network, West Australian newspaper and various magazines, will offer investors the chance to buy new shares for $1.25 each.
Investment bank UBS has agreed to underwrite $150 million of the offer, which Seven West hopes will ultimately raise up to $612 million.
The move comes after Seven West in February unveiled a $994 million half year loss, thanks to major writedowns to the value of its TV assets, and said its total debt stood at just over $1 billion.
The timing of the capital raising helps ensure Seven has a much cleaner balance sheet ahead of any changes to media ownership rules the federal government might introduce.
Communications Minister Malcolm Turnbull is working on policy proposals to overhaul long-standing media rules, including ones that prevent cross ownership of radio, TV and newspapers in the same market.
His plan is also expected to cover possible changes allowing consolidation between regional and city networks.
Analysts said while Seven would have dramatically reduced its debt ahead of any changes taking place, they doubted it would immediately pounce on regional TV affiliate Prime if ownership reforms were approved by federal cabinet.
"They have previously signalled pretty clearly they aren't particularly wanting to take over Prime," Fusion Strategy's Steven Allen said.
Under the pro-rata share issue, Seven West shareholders will be able to subscribe for 2.27 new shares for every three they already hold.
Meanwhile, Seven West has brought forward the redemption of 2,500 convertible preference shares held by major shareholder Seven Group Holdings.
The CPS were due to convert to ordinary shares in April 2016, but Seven Group has agreed to redeem the securities 12 months early.
Seven West said its ability to pay ordinary dividends to its shareholders could be restricted if it didn't redeem the CPS earlier than planned.
The CPS, which are estimated to be worth about $340 million, were issued to Seven Group when it took a 35 per cent stake in Seven West in 2011.
Seven West chief executive Tim Worner said the early redemption of the CPS would help allay uncertainly among investors who were worried about the impact the original April deadline could have on the company.
He said proceeds from the $612 million capital raising would help strengthen Seven West's balance sheet and give it flexibility to pursue growth opportunities if they came up.
Seven West shares were placed in a trading halt on Wednesday as it prepared for the capital raising. The stock last traded at $1.36.
Share
