More than a year after private equity put Southern Cross Austereo in play, the media company is not even an inch closer to catching a whole-of-the company bid. Now, the attention is turning to an eight-year-old contract that appears to have morphed into a so-called poison pill.
Southern Cross Austereo CEO John Kelly. SCA
Street Talk understands Southern Cross’s $100 million traffic data sharing agreement signed with Australian Traffic Network in 2016 under then-CEO Grant Blackley contains a slew of clauses that are proving to be unpalatable to suitors.
Key among them is a change of control payment – of sorts – that would be due to ATN (owned by the ASX-listed Global Traffic Network) should Southern Cross field a bid for its radio network business.
Although the quantum is unknown, sources said its price is linked to the contract’s leftover value of about $89 million right now. Compare that to Southern Cross’s $126 million market capital, and it’s easy to see why this clause is being spoken of as a poison pill – in addition to the disclosure failure, of course.
Its existence has been speculated about for years and carefully guarded by Southern Cross, which has never given shareholders a straight answer and maintained details are “commercial in confidence”. As recently as its annual shareholder meeting on November 25, Southern Cross’s John Kelly batted away a question on this very matter from Samuel Terry Asset Management’s Fred Woollard but stopped short of denying it.
