“Concerns Grow About 8Outdoor” wrote the thomas partnership’s Tim Thomas back in June. He wrote “Many landlords complaining of non-payment of rent and escalating arrears” and “As the June quarter day passes it has become evident that 8Outdoor have missed another round of rental payments with rumours of urgent refinancing talks with banks and other parties”.
We know that there has been a steady procession of private equity people invited to meet with Simon Grice over the past few months. The very clever ones have been quickly put off by the complex and nebulous structure of Grice’s companies and indeed, his business practice.
PJ Solomon are however, allegedly representing Twin Point Capital who are believed to be seriously interested in acquiring the business and if rumours are true, then working with and / or installing former Clear Channel exec Matthew Dearden to run any new business.
With InSite, the UK’s largest independent owner of advertising hoardings, holding both an Equipment Mortgage charge and leases over 51/66 screens in the 8 Outdoor network we do hope that Twin Point Capital know what they are getting into.
I do hope that during PJ Solomons due diligence they have reported on a business practice – hitherto unnoticed within the UK OOH sector. A third party consolidator of freeholds has become the dominant landlord within roadside billboards and a key industry player as they themselves upgrade these sites to digital.
The term ‘media owner’ is now somewhat of a misnomer when applied to many so-called OOH businesses, as very few of them own any freehold locations. They eagerly took the short term money multiple in return for a long, more expensive lease.
Those revenue injections, often five to seven times annual rent agreed for a 10 – 15 year lease period are not insignificant and will distort (ok, ‘inflate’) both ‘revenue’ and EBITDA ratio’s for the trading year in which they are received.
This of course is very handy if you then happen to sell your company to an outside entity less versed with the mechanics of the medium!