January 18, 2019 / 11:29 AM / a year ago

Broadcaster CME scraps sale of Slovenian operations

PRAGUE (Reuters) - Broadcaster Central European Media Enterprises (CME) (CETV.O) (CETV.PR) will keep its Slovenian television networks, it said on Friday after a long-running regulatory process held up plans to pay down debt.

CME, which operates television stations in four other central European countries, announced in the middle of 2017 it would sell its Croatian and Slovenian operations to help tackle a debt pile that had topped $1 billion.

The Croatian sale closed in the third quarter last year but the Nasdaq and Prague-listed company said then it had little clarity on when the 145 million euro ($165 million) Slovenian deal would pass regulatory muster.

CME said on Friday it had terminated the sale to a United Group subsidiary and that it had already reduced gross debt by 30 percent and remained on target to hit planned debt levels without the sale proceeds.

“Slovenia has... reached a level of profitability that it hasn’t seen in a decade,” co-Chief Executive Michael Del Nin said.

“On a five country basis, our (operating income before depreciation and amortization) OIBDA growth rates for both 2018 and 2019 should exceed what we have been expecting from only four.”

“...Even without the proceeds from the planned divestiture, our net leverage ratio should approach 3x by the end of Q1, a delay of just one quarter compared to our expectations if the sale had been completed,” he added.

The falling leverage ratio helps cut CME’s borrowing costs, as agreed in financing deals with its majority shareholder AT&T, which became the main owner after acquiring Time Warner.

CME had net debt $776.7 million at the end of the third quarter and its average borrowing cost had dropped to 3.5 percent. The company reported core profit OIBDA of $20.97 million in the third quarter, a 31 percent year-on-year rise, with Slovenia as discontinued operations.

CME, whose biggest markets are the Czech Republic and Romania, said on Friday OIBDA in Slovenia in the 12 months to September reached $20.8 million.

Reporting by Jason Hovet; Editing by Elaine Hardcastle

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