SA’s Times Group acquires 49pc stake in Radio Africa for Sh1.6bn

What you need to know:

Radio Africa Group MD Patrick Quarcoo described the deal as good for the company, staff and shareholders, adding that no staff or managers would be laid off in its wake.

Times Media Group of South Africa has bought a 49 per cent stake in Radio Africa Group, the company that owns Kenya’s KISS FM radio station.

William Pike, a director of Radio Africa Group, said a substantial portion of the $18.62 million (Sh1.6 billion) deal has gone into recapitalising the company and reducing its debt burden.

Though Mr Pike’s statement suggested that the deal had been concluded, Reuters news agency reported that up to $5.9 million (Sh507 million) of the sale proceeds would be placed into an escrow account until certain warranties are met.

He said the group was retaining another portion of the funds to finance new investments. Other sources suggested that the shareholders had set aside R36 million (Sh360 million) to be used to subscribe for new shares.

Radio Africa’s full year normalised Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the year ended June 30, 2014 is forecast at R45 million (Sh450 million) with three months of trading remaining in current financial year.

Radio Africa Group MD Patrick Quarcoo described the deal as good for the company, staff and shareholders, adding that no staff or managers would be laid off in its wake.

“We will continue to run the business as before. The only difference will be that we will be much stronger financially,” he said.

Mr Pike said the deal between Radio Africa and TMG is intended to act as a springboard to develop a powerful regional media business riding on RAG’s expertise in electronic media and TMG’s strength as the largest newspaper publisher in South Africa.

Radio Africa runs five radio stations Kiss FM, Classic FM, Radio Jambo, East FM and XFM in Kenya. The group also owns KISS TV and has the majority shareholding in the Star newspaper.

Times Media Group owns multiple newspaper titles in South Africa including the Sunday Times (South Africa’s largest newspaper), the Times, Business Day and the Sowetan.

The shares of Times Media Group have gained 37 per cent this year, compared with a 3.7 per cent rise in the FTSE/JSE Africa All Share Index.