Gtn Ltd. · ASX:GTN
Gtn — Merger or Acquisition (December 2016)
40 slides from Gtn's merger presentation, Dec 5, 2016
Slide 1: Acquisition of Radiate and Capital Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only GTN Acquisition of Radiate and Capital Raising 5 December 2016
Slide 2: Disclaimer and important information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Disclaimer and important information For personal use only This investor presentation (Presentation) has been prepared by GTN Limited (ACN 606 841 801) (GTN). This Presentation has been prepared in relation to GTN’s acquisition of Radiate Media an
Slide 3: Disclaimer and important information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Disclaimer and important information For personal use only Accordingly, neither the New Shares nor the entitlements may be offered, sold or resold, directly or indirectly, to persons in the United States, unless they have been registered under the
Slide 4: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Contents 01 Trading update 7 02 U.S. strategy 9 03 Equity raising 19 A GTN business model 23 B Key risks 26 C Selling restrictions 34
Slide 5: Executive summary (1/3)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Executive summary (1/3) For personal use only GTN has exercised its option to acquire Radiate providing entry into the U.S. market One of the leading short form radio advertising platforms in the U.S. Radiate is an Covers most of the Top 100 m
Slide 6: Executive summary (2/3)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Executive summary (2/3) For personal use only GTN has exercised its option to acquire Radiate providing entry into the U.S. market Management believes the long term revenue and earnings potential of Radiate could be in excess of the current GTN
Slide 7: Executive summary (3/3)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Executive summary (3/3) For personal use only GTN has exercised its option to acquire Radiate providing entry into the U.S. market 1 for 9.7 pro rata accelerated non-renounceable entitlement offer (‘Entitlement Offer’) to eligible shareholders
Slide 8: Trading update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Section 01 Trading update
Slide 9: Trading update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Trading update For personal use only GTN is pleased to reaffirm that the business remains on track to achieve its FY2017 Prospectus forecast (excluding Radiate) assuming the continuation of current market conditions All GTN geographies continue
Slide 10: U.S. strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Section 02 U.S. strategy
Slide 11: U.S. market is a very large market opportunity
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES U.S. market is a very large market opportunity For personal use only U.S. represents a significant market opportunity for GTN. Radiate provides a strong foundation for GTN to build out a national network in U.S. Large population Significant radio
Slide 12: Overview of Radiate
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of Radiate For personal use only Radiate is one of the leading short form radio advertising platforms in the U.S. Radiate’s network (pre CBS and new affiliates) Commenced operations in the United States in 1998 as Traffic.com Number of
Slide 13: U.S. strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES U.S. strategy For personal use only Acquiring Radiate is the first step in executing GTN’s broader North American strategy Two key priorities in maximising the Radiate opportunity: A Increase audience Monetise the value of an enlarged network cr
Slide 14: New and enhanced affiliate agreements
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES New and enhanced affiliate agreements For personal use only Radiate has negotiated new affiliate agreements since June 2016, which will significantly increase Radiate’s audience reach in key markets and provide over 0.5m additional spots(1) New an
Slide 15: Radiate's expanded affiliate network
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Radiate’s expanded affiliate network For personal use only CBS contract significantly enhances the Radiate platform, increasing audience reach in all of the top 15 U.S. radio markets. The significant expansion in Radiate’s audience reach is expect
Slide 16: Potential to improve yield
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Potential to improve yield For personal use only GTN intends to drive improvement in yield by expanding Radiate’s affiliate network and audience reach and adopting the same bundling strategy and sales model used in GTN’s other operating geographie
Slide 17: Strategies to drive spot rate
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strategies to drive spot rate For personal use only GTN expects to achieve significant annual increases in average spot rate, driven by the increased effectiveness of the sales force and the enhanced value of an enlarged network following the CBS
Slide 18: U.S. growth levers
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES U.S. growth levers For personal use only GTN intends to use a number of levers to grow the Radiate business 1 Sell spots at premium rates (transition away from ‘wholesale’ sales) 2 Increase spot rates due to larger and high quality network (includ
Slide 19: GTN post Radiate acquisition
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES GTN post Radiate acquisition For personal use only Combination of established, market leading businesses with investment in attractive, large new market opportunities GTN’s share Radio advertising GTN FY2016 of market GTN’s years Population expend
Slide 20: Equity raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Section 03 Equity raising
Slide 21: Overview of funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of funding For personal use only The U.S. expansion strategy will be funded via: — A$21.4 million of existing cash that was set aside at the time of IPO to fund the exercise of the Radiate option — A$60.2 million raised via a fully unde
Slide 22: Entitlement Offer overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Entitlement Offer overview For personal use only Offer size and Fully underwritten 1 for 9.7 accelerated pro-rata non-renounceable entitlement offer to raise gross proceeds of approximately structure $60.2 million Approximately 20.7 million ne
Slide 23: Indicative timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Indicative timetable For personal use only Trading halt and announcement of Equity Raising, Institutional Entitlement Offer opens Monday, 5 December 2016 Institutional Entitlement Offer closes Monday, 5 December 2016 Trading halt lifted – ex
Slide 24: Appendix A: GTN business model
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Appendix A GTN business model
Slide 25: GTN business model recap
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES GTN business model recap For personal use only Business has demonstrated in multiple geographies the ability to achieve revenue growth and margin improvement once a national platform is established, whilst maintaining relatively constant cost base
Slide 26: GTN growth cycle: revenue follows audience
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES GTN growth cycle: revenue follows audience For personal use only Additional affiliates typically result in a net cost to the business until additional inventory is monetised Phase 1: Expand affiliate network & audience Phase 2: Monetise network
Slide 27: Appendix B: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Appendix B Key risks
Slide 28: Key risks – Acquisition risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Acquisition risks For personal use only Unsuccessful GTN has previously incurred losses when undertaking expansions into new markets. Although GTN’s operations have historically generated positive expansion into EBITDA in Australia,
Slide 29: Key risks – Acquisition risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Acquisition risks For personal use only Due diligence The financial information in this presentation in respect of Radiate is subject to a number of assumptions and has not been subject to audit and may not be in relation to indicati
Slide 30: Key risks – Business risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Business risks For personal use only Attraction of new GTN’s success depends on its ability to maintain existing relationships and contracts with affiliates and develop relationships with additional radio and affiliates and televisio
Slide 31: Key risks – Business risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Business risks For personal use only Exposure to A large part of GTN’s revenue is generated outside Australia and is denominated in foreign currencies. Following the acquisition of Radiate, GTN movements in expects that the majority
Slide 32: Key risks – Business risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Business risks For personal use only Expansion into In the future, GTN may consider expanding its operations into the generation of additional information reporting services, including news, other information entertainment and sports
Slide 33: Key risks – Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Transaction risks For personal use only Risks associated with There are general risks associated with investments in equity capital such as GTN shares. The trading price of GTN shares may fluctuate with an investment in movements in
Slide 34: Key risks – Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks – Transaction risks For personal use only Underwriting risk GTN has entered into an underwriting agreement under which the lead manager and underwriter of the Entitlement Offer has agreed to fully underwrite the Offer, subject to the t
Slide 35: Appendix C: Selling restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Appendix C Selling restrictions
Slide 36: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions For personal use only This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distr
Slide 37: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions For personal use only Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for rescission, 180 days after the date o
Slide 38: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions For personal use only Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor h
Slide 39: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions For personal use only New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares a
Slide 40: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions For personal use only Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in S