Metro International sells US operations to former CEO

LONDON - Metro International has agreed to sell its US newspaper operations to a company led by its former chief executive Pelle Tornberg for an undisclosed sum.

However, the three Metro editions in the US will not be owned outright by Tornberg's Seabay Media, but licensed from Metro International.

They will also remain in Metro International's global advertising packages.

Metro Boston will still be published in partnership with the Boston Globe. Including the other editions in New York and Philadelphia, Metro in the US has a total circulation of 590,000 daily copies.

Seabay Media is a new company launched by Seabay Capital Associates, which was formed by Tornberg and other investors around a year ago and has already invested in internet companies.

Its aim is to return the existing US editions to profitability before expanding in the country. Tornberg told Brand Republic the company did not intend to make job cuts but said "we live in a world where everything is unpredictable so I shouldn't promise anything in either direction".

Tornberg also said there has been no indication from the Boston Globe that it wanted to exit its 49% stake in Metro Boston, which he said has been profitable. This is despite the financial difficulties at the Globe, which has resulted in its parent The New York Times company forcing cutbacks at the paper.

The transaction is expected to be completed by June 1, relieving Metro of an underperforming part of its global portfolio.

Its US division made operating losses of €9m in 2007 and €5.3m in 2008.

According to Anders Kronborg, chief financial officer of Metro International, the cost of the move is "much less than the cost of closing down the operations" in the US, which he calculated at €7m-€8m including non-cash items.

In January the company closed its operations in Spain resulting in a loss of more than £5m and up to 83 jobs.

Per Mikael Jensen, president and chief executive of Metro International, said: "Metro USA will continue as a licensed operation to Metro International under strong leadership from one of the experts in the business.

"I'm confident that Metro USA will reach profitability and steady growth."

Tornberg is regarded by many as a key figure in the development of free newspapers. He worked with Metro International since it was founded in 1995 and stepped down as its president and chief executive in 2007.

In addition to the US announcement Metro International said it was going ahead with a rights issue that aims to raise SEK 528m (£45.2m).

The money is necessary to replay a loan of €28.7m and replenish the company's working capital for the next 12-month period.

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