SPH restructuring - the backstory

On Sept 10, 97.55 per cent of shareholders of Singapore Press Holdings (SPH) voted in favour of a plan by the company to hive off its media business, paving the way for the formation of a company limited by guarantee (CLG) called SPH Media Trust.

The plan was first announced by SPH on May 6 as part of a strategic review of the group's businesses, which include property, malls and student accommodation.

Explaining the rationale for the move, SPH said the media industry has faced unprecedented disruption in recent years, with SPH's operating revenue halving in the past five years largely due to a decline in print advertising and print subscription revenue.

SPH's media business recorded its first-ever loss of $11.4 million for the financial year that ended on Aug 31 last year.

The transfer would enable the media business to focus on quality journalism and invest in talent and new technology to strengthen its digital capabilities.

Under the restructuring, all the media-related businesses, including relevant subsidiaries, employees, the News Centre and Print Centre along with their respective leaseholds, and all related intellectual property and information technology assets, will be transferred to SPH Media Trust.

The CLG will operate as a revenue-seeking business but any profits will be reinvested into the media operations rather than distributed to shareholders. Examples of such enterprises in Singapore include the universities, The Esplanade and Gardens by the Bay.

The CLG structure will also allow it to seek funding from public and private sources. The Government has said it is ready to support the CLG with funds for initiatives such as digital innovation and capability development.

The new CLG will initially receive financial help from SPH, comprising $80 million in cash and $30 million in shares.

With the hiving off of the media business, SPH will no longer be subject to the provisions of the Newspaper and Printing Presses Act (NPPA), which limits each shareholding to only 5 per cent.

Keppel Corp, meanwhile, has proposed to acquire SPH through a privatisation offer after the hiving off of the media business. The offer, which values SPH at $3.4 billion, will see SPH delisted and become a wholly owned subsidiary of Keppel. Keppel's share of the deal is about $2.2 billion.

Under the offer, SPH shareholders will receive 66.8 cents in cash per share, as well as 0.596 Keppel Reit units and 0.782 SPH Reit units per share. SPH shareholders are expected to vote on this next month or in November.