article of interest

Thought I'd share, thanks to Mitta over at SWM. Is PRT more attractive on a valuation to SWM? And what is the record date for dividend anyone... Disc, hold SWM....

A CASHED-UP Seven Group will almost certainly look to make investments after substantially reducing debt, but an increased stake in Seven West Media is not on the agenda.

After effectively repaying all of its revolving debt partly from the sale of its stake in Consolidated Media Holdings, Seven is now sitting on a $432 million cash pile. The bulk of its existing debt is not due until 2015 or later.

The directors were yesterday coy on potential merger and acquisition activity areas of interest. Chief operating officer Ryan Stokes said in an interview with The Australian that the group had "no plans" to increase its 33 per cent shareholding in media company Seven West Media.

"We're obviously very confident with the balance sheet and the potential opportunities that could open up," Mr Stokes said. "It gives us greater flexibility and also means we've got a very robust organisation."

There was persistent speculation among analysts when Seven West Media's share price was languishing at a record low last year that Seven Group might look to increase its stake in the business, or even privatise the company.

But shares in Seven West Media have bounced back from October's record low of $1.07 to close at $2.39 yesterday. The market value of Seven Group's interest in Seven West Media has increased by $250m since the beginning of last month.

The group has also been linked with other media assets such as regional television group Prime Media, in which it owns 11 per cent. Prime reports its half-year numbers today.

"The business is always looking at opportunities," Seven Group managing director Peter Gammell told The Australian. "It's certainly a good place to be, having paid down the debt to the levels we have."

The WesTrac business is going like a train, but is restructuring and clamping down on costs after a period of stellar growth. WesTrac China still contributes a small proportion of total earnings, and is facing tough trading conditions. The Coates Hire business is under review.

Given that Seven West Media's free-to-air network is enjoying outstanding ratings, Seven Group's media investments are well positioned for growth in any media sector upswing.

As the media sector continues to shake out and consolidate this year, there should be opportunities, but no one at Seven is giving the game away.