Shareholders in Nine Entertainment are to be given initial details of some of the key parameters of the planned float over the next few days as the marketing of the largest sharemarket float of the year moves into full swing.
As part of the float, Nine Entertainment is expected to raise $275 million in fresh capital which will be used to reduce borrowings to about $600 million - or about two times the level of the company's gross profit, as measured by earnings before interest, tax, depreciation and amortisation, of about $305 million.
Additionally, some of Nine's existing shareholders are expected to sell down a portion of their shares into the issue. At this stage, it is expected that an additional $500 million to $750 million worth of shares in the company could be available for sale through this share facility.
If the full amount of the expected $750 million worth of shares is put forward for sale, it would bring the total size of the capital-raising to about $1 billion, which would make the Nine float the largest in the local market for several years.
Securities analysts with investment banks handling the initial public offering have valued Nine at between $2.5 billion and $3 billion, sources close to the planned issue said on Sunday.
Nine Entertainment's key shareholders, which have a controlling 54 per cent holding in the broadcaster, are expected to sell about a third of their holding, sources said, signalling they could emerge with a 35 to 40 per cent stake in the company after it is listed.
A key focus at this stage is seeking to ensure the share price remains well supported once trading begins on the sharemarket, to support post-listing valuations.
Under the existing timetable the prospectus is expected to be registered in two weeks, with shares in the company to be listed on the sharemarket for trading on December 6.
Existing shareholders are likely to be given a price range for the float in a week, once the initial responses of prospective local and international institutional investors to the offer details are known.
Nine is to hold its annual meeting on Monday, with shareholders to vote to split the number of shares on issue from 200 million to 800 million.