Virgin Radio poised for sell-off again

SMG has apparently become interested again in offloading Virgin Radio on receiving interest from several potential bidders. According to the group, it was presently "exploring its options" for Virgin again. Virgin was earlier put up for sale in 2007, but SMG had to put it on hold because of credit crunch. In a bid to revive the sale process, SMG has reportedly hired investment bank Jefferies International after overhauling its finances and raising £95.1 million in a rights issue. Those who have shown interest for Virgin include Guardian Media Group, private equity firm Vitruvian, and Global Radio, the outfit chaired by former ITV boss Charles Allen, which is also stalking Classic FM parent GCap Media. The group is keen on offloading Virgin because it wants to focus on its television businesses, including STV in Scotland and Ginger Productions. SMG had put off the sale in September, 2007 after offers reportedly came in below its £80 million target price.

Although it became difficult to sell off Virgin in tighter credit markets, SMG now claims that the rights issue and newly concluded loan arrangements would allow it to sell the station from "a position of strength". According to a spokesman of the group, Virgin Radio has always been non-core. SMG is exploring its options at present because a number of expressions of interest have been received from various parties. SMG has also unveiled a new five-year, £90 million loan facility at the end of 2007 that now represents the entirety of its borrowings.