Photon to be debt free after agreeing to sell Field Marketing & Retail Agencies for $146.5 million – keeps star performers BMF, BWM and Naked

Photon Group Limited (ASX:PGA) today announced the sale of its Field Marketing & Retail Agencies division to Navis Capital Partners for cash consideration of $146.5 million in a transaction that, when completed, will leave Photon debt free.

Photon’s chief executive officer, Jeremy Philips (left), said that following completion of the transaction, the company would be greatly simplified, with 14 agencies, and would have an excess cash balance of at least $15 million.

Says Philips: “At the beginning of the 2011 financial year, Photon was an eclectic mix of 45 highly uneven business units in five divisions. The company carried an entirely unsustainable debt load of $450 million.

“During the course of the past year Photon has been transformed through this transaction, other divestments, a recapitalisation, and a corporate restructure. We have now transformed Photon into an unleveraged, focused, transparent company, with leading Australian and international agencies including Naked, BMF, and BWM.”

Under the agreement, Photon will sell its five Field Marketing & Retail agencies – Demonstration Plus, Club Sales & Marketing, Powerforce, Ausrep, and REL- as well as two closely-related businesses – Artel and Retail Insight.

This price of $146.5 million represents a multiple of 7 times the last 12 months EBITDA.

Including this transaction, over the past year, Photon has sold 13 businesses for a total of $233 million consideration at an average of 7.5 times trailing 12 months EBITDA.

Photon chairman Brian Bickmore said the board and management had set out a very clear strategy during the year to reduce debt and simplify Photon’s structure.

“We have repeatedly made it clear we would not be involved in a fire sale of Photon’s valuable assets. The CEO and his management team have achieved a dramatic turnaround in the past year from the company’s previous unsustainable debt load,” Mr Bickmore said.

Adds Phillips: “On behalf of the company, let me thank Field Marketing and Retail Agencies head Craig Hart, the heads of the businesses, and the entire team in the division for all of their hard work and dedication, particularly the efforts over the last year to introduce a consistent culture of collaboration, efficiency and professionalism across the division. Craig Hart will become chief executive officer of the entity that will own these agencies after completion.”

The business is being purchased by a fund advised by Navis Capital Partners, South East Asia’s largest private equity business, with over US$3 billion under management and seven offices across Asia. Philip Latham of Navis said: “We are extremely excited to be partnering

Craig and his management team in growing Australia’s largest field marketing operations and are keen to pursue an expansion strategy across South East Asia, China and Asia”.