Afloat, but not on cloud Nine
It wasn't quite a champagne launch but the bubbly still flowed at the sharemarket debut of Nine Entertainment as current affairs star Liz Hayes rang the bell on a new era of public ownership for the TV network.
Nine Entertainment shares fell 3.4 per cent on their sharemarket debut, almost 14 months after US funds Apollo Global Management and Oaktree Capital Group took control of the broadcaster in a debt-for-equity swap.
Shares in Australia's second-biggest free-to-air broadcaster dropped to $1.98 at the close of Sydney trading, compared with an offer price of $2.05 a share.
The benchmark S&P/ASX 200 Index fell 0.2 per cent.
Nine chief executive David Gyngell made no comment on the pricing as he welcomed the company's new shareholders with a friendly warning that he "looked forward to the ups and downs" and would not sugar coat the realities of doing business.
"That's the way we run our business at Channel Nine - often wrong but never in doubt," Mr Gyngell said, to laughter from the crowd of Nine Entertainment staff and investors.
"You'll never hear us sugar coat it."
Mr Gyngell described the float process as "satisfying", saying in a statement that the share offer had been oversubscribed.
"We welcome both domestic and international investors and look forward to their long-term investment in our business," he said.
Nine's float values the company at $1.93 billion and has raised $636 million, with $395 million flowing to the company's private owners, including two US hedge funds that retain stakes.
A further $199 million goes to paying down debt while the company will receive $50 million in cash.
Mr Gyngell will be paid $2 million a year and received about 4.5 million shares under the terms of the float, worth $9.3 million at the issue price.
He also received a cash bonus of $2.5 million for taking the company to listing and an additional $4.5 million worth of performance rights.
BBY analyst Mark McDonnell said the first few hours of trading should not be seen as indicative of where the share price might go.
The shares came on at the low end of the $2.05-$2.35 range indicated during the offer and were "fairly priced", Mr McDonnell said.
The challenge for Nine now will be to achieve its 38.4 per cent ad revenue market share goals against a strengthened Ten Network.
Ten has billionaire shareholders Lachlan Murdoch, James Packer and Bruce Gordon backing a $200 million loan for the network and has secured rights to the Twenty20 cricket.
"Nine has a fantastic franchise in cricket through the summer and Ten is going to nibble away at that," Mr McDonnell said.