Will Mecom Rocket ?

Online Stock Trading - Will Mecom Rocket Today ?

Will MECOM (MEC), the UK-based European newspaper owner, rocket today ? If the talk on the BBs is to be believed it might well shoot up 100% or more. Why? Because it has got rid of some of its debt mountain by selling its titles in Germany to one of Germany's oldest publishers for €152m (£137m).

Mecom has debts of around €650m and, before this sale, was in danger of breaching its banking covenants.

M. DuMont Schauberg has bought the Berliner Zeitung, Hamburger Morgenpost and several other titles at a price of €152m.

The deal was due to be signed on Monday night.

Take a look at the MEC share chart.

2 Year Chart


3 Month Chart


According to Simon Davies at RBS : “This is hugely good news for Mecom, although on its own it is not enough to resolve its balance sheet stresses.”

“They have got rid of what has been a problem company for them at a multiple that is very attractive for a trade sale and a significant premium to Mecom’s own valuation.”

Mecom has also been involved in informal discussions to sell its businesses in Norway and Poland, which may be worth between €400m and €460m.

The Mecom share price has fallen 94% in the past year, but rose on Monday 13% to 2p.

"Sources close to the group said it is also close to selling a further £60m of peripheral assets."

So tomorrow could be a wild ride for Mecom shareholders. For bronco riders only.

From what I can see most people are optimistic tomorrow will be a big up day, although one or two say the news was already in the price.