More gloom from the embattled media sector with regional free to air broadcaster, Prime Media Group (PRT) forecasting its December half-year net profit will come in between $15.3 million and $16.3 million, little changed from what the company earned in the December 2015 half.
Prime Media Group, a major regional TV group, saw its shares slide more than 7% to 31 cents at the close yesterday in the wake of an earnings downgrade for the year to June 30. At one stage the shares were down 10% at 30 cents, a decade low.
Five months ago, Macquarie slashed earnings forecasts and pulled back its recommendation to Underperform as the recovery in earnings was likely to occur at a slower pace. As the analysts started to look ahead of the upcoming FY10 release, they discovered a different dynamic. All of a sudden, earnings forecasts were found as probably too low, so they have been raised. FY10 EPS estimate lifted by 13%, FY11 increased by 2%.
The company intends to raise up to a combined $110m at 48c per share through a 10 for 7 renounceable offer raising up to $88 million and a placement to major shareholder Seven ((SEV)) raising approximately $22m. While the broker notes the raising reduces the risk of a covenant breach, it also comes at a price, with estimated FY10 EPS dilution of up to 54% in the event that the full $110m is raised. Sector: Media.