Seat Pagine Shares Drop After Dividend Is Omitted (Update3)
By Chiara Remondini
March 19 (Bloomberg) — Seat Pagine Gialle SpA, Italys
largest publisher of telephone directories, fell the most since
it started trading in Milan in August 2003 after saying it wont
pay a dividend as it focuses on reducing debt.
Seat lost 3.4 euro cents, or 21 percent, to 10.5 cents,
cutting the Turin, Italy-based companys market value to 894.3
million euros ($1.4 billion).
Seat, which is rated below investment grade by Standard %26amp;
Poors, had 3.27 billion euros of debt at the end of last year
after borrowing to buy a German directory company. Today, Chief
Executive Officer Luca Majocchi said debt repayment is “well on
track and he wont consider more acquisitions.
“The company has a good cash generation but the debt is
very heavy, said Niccolo Pini, who manages the equivalent of
$1.3 billion at Banca Ifigest SpA in Florence.
In August, Seat agreed to buy Germanys Wer Liefert Was GmbH
to bolster its directory business in Europes biggest economy.
Borrowing for the deal helped push up debt from 3.23 billion
euros in September.
Net income advanced to 98.4 million euros last year from
80.1 million euros the previous year, Seat said late yesterday.
Sales fell 0.5 percent to 1.45 billion euros. The company had
forecast 2007 sales would be “slightly higher than the
previous year.
Stock Downgrade
Seat forecast yesterday that earnings before interest, tax,
depreciation and amortization, or Ebitda, will be about 610
million euros this year “after one-off costs and investment to
grow the online business in Italy and abroad.
CA Cheuvreux analyst Giovanni Montalti downgraded the stock
to “sell from “underperform citing lower-than-forecast
results in the fourth quarter and profit guidance for 2008.
Majocchi is focusing on Italy this year, a strategy shift
after betting on expansion abroad to lift sales and earnings.
Seat is also introducing new products such as Web-based directory
services to attract clients.
Seat said it will forgo a dividend payment on last years
results in favor of reducing debt. It will pay 35 million euros
as part of an installment on debt due in June.
“The debt situation is well under control, Majocchi said
at an analyst meeting in Milan today. The company said a “sound
hedging policy is protecting Seat from market-rate increases.
Future Dividends
Majocchi declined to say if the company will pay a dividend
on this years profit, adding that Seat will give a forecast on
its payout, 2009 and 2010 performance after third-quarter
results.
“In the current credit market environment, the company has
adopted a financial policy devoting available financial resources
to debt repayment and Internet development in Italy, Seat said
in yesterdays statement.
Ebitda, excluding non-recurring and restructuring charges,
rose 6.3 percent to 650.2 million euros. The company had forecast
a 10 percent increase in Ebitda.
Seat operates in the U.K., Germany, France and Spain through
its units Telegate AG and Thomson and also controls Europages SA,
an online businesses directory available in 25 languages,
including Chinese and Arabic.
Private-equity firms Investitori Associati, CVC Capital
Partners, Permira Advisers Ltd. and BC Partners boosted their
combined holding in Seat to 50.4 percent from about 49.6 percent
in October after shelving plans to sell their stakes.
The investors had hired Lehman Brothers Holdings Inc. in May
to find a buyer for the company and then canceled the plan
because of market conditions.
“I dont know if the funds are considering a delisting,
Majocchi said. “I think such a measure would be extreme and not
easy to carry out.
To contact the reporters on this story:
Chiara Remondini in Milan at
cremondini@bloomberg.net
