- What's Newcastle (NCT +3.5%) doing buying a newspaper company? The stock reverses an early dive on news of the Local Media acquisition and turns higher following the release of the investor presentation.
- Newcastle notes the purchase was made for 3.4x of 2013 EBITDA with an expected levered yield of 25% in year 1 and 30% in year 2. The company also comes with $33M of appraised real estate value - backing that out means the purchase was for 2.5x 2013 EBITDA, with large urban peers trading at 4.0x-5.5x.
- NCT is considering the spin off Local Media and GateHouse Media into a new public company, "New Media" (as part of the deal, Newcastle converted its debt holding in GateHouse into a 59% equity stake). New Media intends to pay out a substantial portion of its free-cash flow in the form of a dividend with expected yield of about 20%.
- "With industry distress comes buying opportunity ... once trading at 10x EBITDA, we believe we can buy local newspapers and directories at (fractions of that valuation)."
- The conference call remains set for 2:30 ET.
From other sites
at CNBC.com (Jun 11, 2013)
at CNBC.com (Mar 1, 2013)
at CNBC.com (Aug 8, 2012)
at CNBC.com (May 15, 2012)
at CNBC.com (Dec 21, 2011)
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