Press release from Marketwire
GVIC Announces Value Enhancement Initiatives
Tuesday, November 12, 2013
GVIC Announces Value Enhancement Initiatives19:20 EST Tuesday, November 12, 2013
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 12, 2013) - GVIC Communications Corp. (TSX:GCT) ("GVIC" or the "Company") announced today that a program of strategic initiatives has been undertaken to enhance its operations and financial position. These initiatives have been designed to address current economic and market challenges, as well as position the Company for long-term growth in accordance with its business strategies.
Value Enhancement Initiatives
- Evolve, Enrich and Extend strategy. The Company has embarked on a comprehensive initiative to grow its business information operations through an Evolve, Enrich and Extend strategy. This strategy focuses on the provision of richer content, data and information, related analytics and business and market intelligence, and the achievement of greater customer utility and decision dependence. Management is currently reviewing the spectrum of verticals in which it operates with a view to focusing resources and efforts on those verticals and opportunities deemed to have the greatest growth potential that can be realized through this Evolve, Enrich and Extend strategy. Business information operations now represent more than half of GVIC's EBITDA. 45% of the business information EBITDA is derived from rich information digital data products designed for scalable growth and high levels of profitability.
- Sale of real estate assets. The Company has initiated plans to sell a significant portfolio of real estate properties in the near term. $4 million was realized from the sale of property in April. $6.5 million was realized from real estate sales in September. Other property dispositions are currently being negotiated. Given current capitalization and interest rates, monetizing real estate value to reduce leverage has been deemed prudent. The real estate sales have been targeted to a) cover any required deposit relating to the previously reported notice of possible re-assessment from Canada Revenue Agency (CRA) for the 2008-2011 income tax years, should a deposit become payable and b) result in a net reduction of leverage from current levels. The timing of any potential CRA re-assessment is not determinable at this time.
- The Company (excluding its joint ventures) reduced debt by $8.7 million during the quarter. The Company's adjusted debt to EBITDA ratio was 3.1x at quarter end as a result.
- Sale of non-core assets. Subsequent to quarter end, the Company sold two money losing community newspapers and acquired several more profitable community media assets that provide a better strategic fit with the Company's operations.
- Cost reduction initiatives. Given the softness currently being experienced in the Company's community media operations, a variety of significant cost reduction measures have and are being implemented to reduce overall operating costs. The initiatives are targeted to reduce costs by more than $7 million on an annualized basis. Some of these savings were realized in the third quarter.
The profitability enhancement and asset sale initiatives outlined are intended to enhance GVIC's operations and cash flow, reduce leverage and place the Company in a strong position with which to take advantage of growth opportunities through both operational development and acquisition.
Shares in GVIC are traded on the Toronto Stock Exchange under the symbol GCT.
About the Company: GVIC Communications Corp. is an information communications company focused on the provision of primary and essential information and related services through print, electronic and online media. GVIC is pursuing this strategy through its core businesses: the local newspaper, trade information and business and professional information markets.
This news release contains forward-looking statements that relate to, among other things, the Company's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates. These forward-looking statements include, among other things, statements relating to the Company's expectations regarding revenues, expenses, cash flows and future profitability and the effect of GVIC's strategic initiatives, including its expectations to grow its business information operations, to implement cost reduction measures, to sell real estate properties and utilize proceeds of such sales to cover required CRA re-assessment deposits and reduce leverage, to sell other non-core assets, to grow cash flow per share, to pay dividends and to reduce leverage and debt levels. These forward looking statements are based on certain assumptions, including continued economic growth and recovery and the realization of cost savings in a timely manner and in the expected amounts, and are subject to risks, uncertainties and other factors which may cause results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, and undue reliance should not be placed on such statements.
Important factors that could cause actual results to differ materially from these expectations include failure to implement or achieve the intended results from GVIC's strategic initiatives, the failure to implement or realize cost savings in a timely manner or in the expected amounts, the failure to negotiate or complete the sale of real estate and other non-core assets and the other risk factors listed in the Company's Annual Information Form under the heading "Risk Factors" and in the Company's MD&A under the heading "Business Environment and Risks", many of which are out of the Company's control. These other risk factors include, but are not limited to, the ability of the Company to sell advertising and subscriptions related to its publications, foreign exchange rate fluctuations, the seasonal and cyclical nature of the agricultural industry, discontinuation of the Department of Canadian Heritage's Canada Periodical Fund, general market conditions in both Canada and the United States, changes in the prices of purchased supplies including newsprint, the effects of competition in the Company's markets, dependence on key personnel, integration of newly acquired businesses, technological changes, tax risk and financing and debt service risk.
The forward-looking statements made in this news release relate only to events or information as of the date on which the statements are made. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
FOR FURTHER INFORMATION PLEASE CONTACT:
GVIC Communications Corp.
Mr. Orest Smysnuik
Chief Financial Officer