oOh!media to raise $167m, keeps Cook at the helm to cope with COVID-19

OOh!media has called its latest $167 million equity raising round and leadership plans both a positive for the company as the COVID-19 crisis bites, as well as a sign of long-term business value.

The ASX-listed out-of-home (OOH) company has kicked off a fully underwritten equity raising round as part of a series of proactive measures aimed at shoring up financial flexibility and liquidity in the face of the turbulent current macroeconomic conditions. The news comes just days after the OOH provider called a trading halt and more than a week after it dropped earnings guidance in response to the coronavirus pandemic.

Alongside capital raising, the latest initiatives include identified savings of up to $30 million in operational expenditure and fixed rent expenses, reduction of CapEx expenditure down from $60 million to $70 million to between $25 million to $35 million, and renegotiated debt arrangements and extension to increase gearing.

In addition, the company confirmed long-standing CEO, Brendan Cook, will remain at the helm until at least the end of 2020, reversing previous announcements this year of his retirement. As part of the latest program of changes, founder and managing partner of HMI, Mick Helman, will also be joining the oOh!media board.

In the ASX announcement, Brendon Cook, said trading for CY20 to date remained flat compared with the corresponding period in FY19, which was in line with expectations.

“With the impact of the economic outlook remaining uncertain at this time, we see risk around trading for FY20 and as such have taken the prudent and cautious measure of raising equity to repay debt, and implementing cost control measures and CapEx reductions,” he stated.  

“Despite this challenging market environment, management believes the fundamentals for the our-of-home industry remain positive. The initiatives we announced today provide the company with significant liquidity to trade through uncertain times ahead, and will position oOh!media to continue leading the out-o-home industry which we believe is a long-term structural growth sector.”

A spokesperson said both the financial and leadership announcements brought additional stability and certainty for all oOh! stakeholders, including staff, suppliers, advertisers and shareholders.

“While this was not a liquidity issue, the Board and management believed it was prudent to pursue measures that improved balance sheet flexibility, given the uncertain economic outlook,” the spokesperson said. “Today’s announcement is a positive sign for the company in challenging market conditions.

“It reflects the long-term value of the business, and good future prospects for the out-of-home sector in general once conditions ease.”  

The spokesperson highlighted Helman’s credentials to strategic investment decision-making as a huge support for the board, while Cook’s continuing leadership helped minimise disruption “at a time of national crisis and economic uncertainty”.

“These measures, coupled with the addition of Mick Helman to the Board and the agreement between Brendon Cook and the Board that he will remain in the role until at least 2020, place the company in a strong position both now, and for when the market recovers – and it will recover,” the spokesperson said.

“It also shows the company is taking appropriate and prudent measures to manage operations throughout this period, being flexible and adapting where necessary.”

There is no doubt current business conditions are severely testing many in the out-of-home market, the spokesperson said.

“There is a shift in how people are living their daily lives, with movements becoming more localised as individuals and families adapt their routines in line with social distancing and evolving government advice,” they continued. “Using its national network of assets, oOh! is working closely with its customers to adjust to these evolving social patterns.”

Ooh! is one of a series of Australian media providers to have withdrawn earnings guidance or suspended trade as COVID-19 continues to spread globally, wreaking havoc on stock markets, advertising spend and the Australian dollar.  

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