Financial reprieve for Seven West Media upon sale of HQ for $75 million

The well-publicised financial troubles of Seven West Media (ASX: SWM) are set for a reprieve with the company today confirming the sale of their West Australian headquarters for $75 million to a trust managed by Primewest Group (ASX: PWG). 

Under the terms, Seven will lease back the property at $4.3 million per annum with 3% rent reviews. The major cash injection will assist the troubled media company which has dominated headlines over the past 12 months for its poor financial performance which has led it to sell various business subsidiaries as well as implement mass staff layoffs. The latter however has been somewhat fuelled by COVID-19 where Seven’s expensive AFL broadcast rights have significantly impeded the company whilst the AFL season is on hold. 

In their announcement to the ASX, Seven confirmed West Australian Newspapers and TVW7 (Seven’s WA Channel) will continue to occupy the site as their headquarters, but did not make reference to other businesses within the group, suggesting that moves are coming. 

Further suggesting that Seven is likely on the move, Primewest confirmed that their acquisition of the 5.65 hectare Osborne Park facility is a gateway site for their future plans. 

“If the draft Herdsman Glendalough Structure Plan is approved it will be a game changer for the property and opens up significant opportunities for mixed-use as well as commercial development,” said Primewest Chairman, John Bond. 

“We believe the Herdsman Glendalough area, together with the Stirling City Centre, will form Perth’s second CBD with a vibrant urbanism that embraces mixed use development, dense built form, high frequency public transport and quality public spaces for the enjoyment of residents and employees.” 

The $75m, which is expected to settle in four weeks, continues Seven’s corporate restructure since the appointment of CEO James Warburton in August 2019 which also coincided with the $40m sale of Pacific Magazines to Bauer Media. 

In their half-yearly results for the period ending 31 December 2019, Seven West Media reported EBITDA of $119.7m, a 20.8% decline on the corresponding FY19 period, which was driven by large falls in advertising revenue and onerous contracts. 

The financial troubles of the Company which holds net debt circa $540m have been reflected in SWM’s share price which has fallen from $0.40 at the time of Warburton’s appointment to now be trading at $0.083. 

Seven and the AFL are still in discussions about how they will address the 6-year broadcast deal signed in 2015 for $2.5 billion.