Fairfax raids Stuff kitty before merger

AUCKLAND: Australia’s Fairfax Media Group raided Stuff’s kitty ahead of a planned merger with broadcaster Nine Entertainment Co, which does not see a home for the New Zealand unit.

Stuff paid $22.5 million in dividends to its Australian parent in the year ended June 30, and paid another $10 million in September, financial statements lodged with the Companies Office show. The second return largely drained the Kiwi media group’s coffers — cash and equivalents had been almost $11 million at balance date. The company is widely expected to be sold by its enlarged Australian owner.

If Grant Samuel was correct in its independent adviser report on the FairfaxNine Entertainment merger, the Australian owner could pocket another $115 million$135 million. Grant Samuel noted the Kiwi unit’s operating performance was expected to keep declining in the short to mediumterm until its transformation bedded in, providing it was successful.

New Zealand has been a mixed bag for the Australian publisher, although it has managed to pay itself a dividend in 10 of the 15 years.

When it bought Rupert Murdoch’s Independent Newspapers Ltd publications it funded about $891 million of the acquisition through relatedparty loans. That meant that it could extract healthy dividends and sizeable interest payments from the New Zealand division. — BusinessDesk