Australian media major and publisher of The Sydney Morning Herald and The Age Fairfax Media Ltd has agreed to sell its majority stake in New Zealand online auction site Trade Me Group Ltd for approximately A$616 million in order to reduce its debt burden.
Fairfax agreed to sell its 51-per cent stake or 220 million shares in Trade Me to institutional investors at a price of A$3.05 a share, 17 cents lower that the share's closing price of A$3.22 Friday. The shares are being sold through Swiss financial services firm UBS AG.
The media company which had a net debt of around A$914 million as at the end of June including 99 million of debt within Trade Me, plans to significantly reduce it by quitting its New Zealand auction business.
Fairfax chief executive and managing director Greg Hywood said, "Trade Me has been a great business for Fairfax and we have learned a great deal more about the successful operation of digital businesses over the years since we acquired Trade Me for NZ$750 million (A$633 million) in 2006."
"The proceeds from the sale will reduce Fairfax's net debt and will provide us with a very strong balance sheet and the financial flexibility to invest and to complete the company's structural transformation,'' Hywood further stated.
Trade Me was floated as a separate listed entity in December last year at A$2.07 a share. The stock reached a high of A$3.55 in October.