Entertainment Network (India) Limited is selling the out-of-home media/outdoor advertising business housed under a subsidiary Times Innovative Media Limited (TIM) to its promoter Bennett Coleman & Company Ltd (BCCL) for a cash consideration of Rs 45 crore.
ENIL owns 83.44% of TIM, pegging its valuation at Rs 54 crore. Others who invested in TIM around two years ago include Goldman Sachs and Lehman Bros.
BCCL will also repay ENIL’s loan to TIM and also absorb the obligations under the financial guarantees provided by ENIL as per the proposed transaction. As on July 8, 2010 the loans advanced by ENIL to TIM and the financial guarantee obligations stood at Rs 42.50 crore and Rs 31.23 crore respectively.
ENIL had engaged Morgan Stanley to provide a report on transaction rationale and valuation services for TIM.
TIM’s total income rose around 11% to Rs 149.41 crore in FY 2008-09 but posted a net loss due to the lower ad spends, cancellation of long term advertising contracts, new investments and certain one off costs.
During that year the Out-Of-Home advertising industry grew 3.6% to Rs 1,448 crore with its share in the overall ad-pie standing at 6.4%, as per a Group M Report.