UPDATE: RCS Shareholders Agree to Rights Issue; Bankers Offer Help

   By Gilles Castonguay 
 

MILAN--Italian publishing group RCS Mediagroup SpA (RCS.MI) Sunday said shareholders representing nearly half of its stock had agreed to take part in a capital increase to help in its struggle to cut costs, sell assets and refinance debt.

RCS, the group behind the influential newspaper Corriere della Sera, said the board expected RCS to have the resources to stay in business even though it foresaw the group running a significant loss this year.

"The (board members)...consider it reasonable to expect that the Company can dispose of adequate resources to continue operating for the foreseeable future," it said in a statement.

Faced with a sharp decline in advertising revenue as a result of the crisis in Italy and Spain, where it also has a presence, RCS adopted in December a plan to cut costs and sell assets no longer considered core to its business. The three-year plan also aims to reduce its reliance on print by expanding into digital media.

Among these various initiatives, RCS would look at selling 10 magazines in Italy--or close them down at the cost of hundreds of jobs, a person close to the group recently said.

In the statement issued Sunday after a meeting of its board, RCS said shareholders representing 44% of its stock had agreed to take part in a capital increase of at least EUR400 million by July, and a second, optional one for up to EUR200 million by December 2015.

Their agreement to the two capital increases was crucial for RCS to convince a pool of banks to open a total of EUR575 million in credit lines to help it refinance debt, it said.

Some of those banks are among the shareholders that agreed to the capital increases, such as Intesa Sanpaolo SpA (ISNPY, ISP.MI) and Mediobanca (MDIBY, MB.MI).

In 2012, RCS posted a wider net loss of EUR509.3 million against a net loss of EUR322 million for the previous year.

Earnings before interest, taxes and depreciation, or EBITDA, fell to EUR61 million from EUR163.4 million.

Consolidated revenue slipped EUR1.60 billion from EUR1.86 billion.

Net financial debt stood at EUR845.8 million, down from EUR938.2 million at the end of the same period, partly thanks to the proceeds earned from the sale of its French book unit RCS Livres, which controls publishing group Flammarion.

RCS forecast a "significant" net loss for 2013 on weak consolidated revenue.

"At the moment, signals of a reversal in the trend (crisis) is not expected in 2013 during which risks and uncertainties are still high," it said.

RCS nevertheless expected its debt to come down some more what with the planned asset sales.

RCS is holding a conference call with analysts on Monday.

Write to Gilles Castonguay at [e-mail]

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