PE Firm Buying 25% of Santillana

MADRID (Reuters) – Spanish media group Prisa (PRS.MC) has agreed a deal worth around $362 million to sell 25 percent of its book publishing arm, Santillana, to a Credit Suisse (CSGN.VX) private equity fund, as part of a plan to slash debt.

Prisa said on Monday it planned to sell the stake in Santillana — best-known in Spain and Latin America — to Credit Suisse-run DLJ South American Partners.

It said it had more asset disposals on the table to cut its over 5 billion-euro ($7.3 billion) debt pile.

“Prisa is continuing with its asset disposal plan and could make another announcement in the coming weeks,” Chief Executive Juan Luis Cebrian told reporters at a breakfast.

Spain’s biggest media company is saddled with debt from a buying spree in the boom years which included expansion in Latin America and the buy-out of its Sogecable broadcasting arm.

Prisa, which is targeting 3 billion euros of revenues in 2009, is the owner of left-leaning El Pais, the country’s most influential newspaper. Long supportive of Spain’s Socialist government, El Pais has become critical of Prime Minister Jose Luis Rodriguez Zapatero since the government approved a digital television law that will boost competition for Sogecable’s Digital+ digital TV platform.

Like other media groups, the company has been hit hard by a global advertising slump, but the effects have been mitigated by Prisa’s diversified portfolio that includes education and real estate as well as newspapers, radio and television.

By 1117 GMT, Prisa’s shares were little changed at 3.89 euros, cooling from gains of over 2 percent on initial positive sentiment to the Santillana announcement.

Espirito Santo analyst Sandra Sousa said in a note: “This agreement should allow Prisa to bring in important cash and shows the company’s commitment in reducing its debt levels.”

Nevertheless, she said the price was 22 percent below her valuation for Santillana and was far from a definitive solution as it looks for fresh cash ahead of the expiry of a 2 billion-euro credit facility in March 2010.

Prisa had tried to sell Digital+, but has been forced to put other assets up for sale after rejecting a 2.2 billion euro offer from Telefonica (TEF.MC) and France’s Vivendi (VIV.PA) for Digital+ as too low. “(Santillana) is the jewel in the crown, but as the sale of the (Digital+) platform appears to be delayed, they have no choice but to resort to plan B,” said an equities specialist in Madrid who asked not to be named.

The Santillana sale is part of a wider asset disposal programme believed to include Portuguese media arm Media Capital, as the company scrambles to make debt payments. It has already negotiated several extensions on expiring loans.

Financial website Finanzas.com said talks between Telefonica and Vivendi over Digital+ had broken down, and that Telefonica was now in talks with Italy’s Mediaset (MS.MI).

Asked whether there were any developments on the Digital+ sale, Prisa’s Cebrian told reporters: “There’s no change on our Digital+ project.” ($1 = 0.6810 euro)

By Tracy Rucinski
(Additional reporting by Jason Webb, Tomas Gonzalez; Editing by David Holmes and Simon Jessop)