Saturday, September 5, 2009

Incisive Split in Two as Banks Take Control

After very lengthy negotiations with the banks who funded the growth and MBO of Incisive Media it looks as though a conclusion is close.

Ambitions to be a mega business media company, long part of CEO Tim Wellers desire, are over. The business is being split in two. The US business, which includes American Laywer will have seperate management and different ownership from the UK based business, which Weller will continue to run. The debt structure was different in the US and different terms have been agreed.

The US piece will be owned 49% by the banks. IN the UK the debt mountain of around £400m is likely to be halved and in which case private equity owner Apax are all but wiped out. That part of the deal is, we understand, not yet concluded.

In his note to staff last week Weller claims that his business is still operationally profitable.

His only job now, and the only metric the banks will be interested in, is how fast he can repay the remaining debt. This is no small task. The UK business has some very troubled assets. The dependence on legacy print is far too high. The overhead is too large for a sustainable future. Wellers note says that he "cannot wait to get back into the business" and that his business has "leading brands and "a proven strategy". What he doesn't say, is that that his strategy was proven in a world that no longer exists. He needs a new strategy if he is to stand a chance of meeting his banks expectations.

Weller and his team will not be short of things to tackle and his new owners will rightly be harder and more impatient task masters than any his business has had before.

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