Gannett's subsidiary, Gannett SpinCo, Inc., filed with the U.S. Securities and Exchange Commission (SEC) in connection with Gannett's previously announced plan to separate into two publicly traded companies.
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There will be a publishing company under the current Gannett name and a broadcasting and digital company under a new name. The planned separation, which will be effected through a tax-free dividend of shares in the publishing company to existing Gannett shareholders, is on track to be completed in mid-2015.
Gracia Martore, president and chief executive officer, said, “The filing of the registration statement for the publishing business is a key step forward in completing our separation, which will create two sharply focused, independent companies with enhanced flexibility to align their strategies and resources with their growth profiles and priorities.â€
The new Gannett will have a virtually debt-free balance sheet, strong cash flow, and commitment to financial discipline, the company said in the statement.
Bob Dickey, who will be president and chief executive officer of the publishing company, said, "While the publishing business and its related digital assets will be spun off as a new publicly traded company, it is a long-established industry leader, rooted in journalistic excellence and innovation, and it will continue to operate under the Gannett name. We are incredibly excited to turn the page to this next chapter in Gannett's storied, 108-year history."
Gracia Martore will be president and chief executive officer of the broadcast/digital company, which will also continue to be an industry leader, with a portfolio of 46 owned or serviced television stations covering more than 35 million households, and robust, leading-edge digital businesses with unparalleled offerings including Cars.com and a majority stake in CareerBuilder.com.
As outlined in the Form 10, the publishing company expects to pay a regular cash dividend of $0.32 per share annually (subject to adjustment based on the final distribution ratio), and plans to commence a $150 million share repurchase program expected to be used over a three-year period.
The broadcasting/digital company expects to pay a regular cash dividend of $0.56 annually which, combined with the publishing company's anticipated dividend, represents a 10% increase over the current Gannett dividend. The broadcasting/digital company also plans to replace its existing share repurchase program with a new $750 million authorization expected to be used over the three-year period after the separation.
This expected new authorization, combined with the publishing company's authorization, represents more than a doubling of the current Gannett share repurchase program.
Under the current plan, both companies will have leverage levels well below peer companies and will maintain the flexibility to adjust repurchases based on business conditions, new opportunities, and other factors. ■