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Shares in ARN Media (ASX: A1N) shot more than 25 per cent higher today after the company announced it had reached a binding $12.09 million settlement with Kyle Sandilands, resolving all outstanding legal proceedings between the pair.
The stock hit a high of 27.5c this morning as investors responded to the removal of a major overhang that has weighed on the company since the on-air crisis involving Sandilands and former co-house Jackie "O" Henderson erupted in February.
Under the terms of the settlement disclosed to the ASX, Sandilands will receive $12.09 million in cash payable in instalments, comprising $3 million in July, with the balance paid monthly until June 2029.
ARN will also provide $1.5 million in advertising services on its partner platforms over three years, and Sandilands will receive a 19.9 per cent net revenue share from his new venture for up to three years.
In return, Sandilands will not provide services to ARN in any capacity.
The agreement includes a nine-month non-compete restraint preventing Sandilands from working in competing radio, expiring in March 2027.
The settlement draws a line under a turbulent period for ARN that began with an on-air incident on 20 February this year, which triggered licence conditions imposed by the Australian Communications and Media Authority (ACMA) and ultimately led to the termination of both Sandilands' and Henderson's contracts.
ARN chief executive Michael Stephenson says the deal provides a path forward for the business.
“This agreement brings certainty for ARN and resolves the legal dispute," he says.
“ARN remains focused on executing its strategy, including driving a leaner, more efficient operating model, strengthening its core radio network and continuing to invest in digital capabilities and long-term growth."
ARN chairman Hamish McLennan is understood to have personally led negotiations over the past week to finalise the binding agreement.
Prior to today's announcement, some media sources had reported the agreement was as high as $15 million.
However, the final sum is significantly less than the $85 million that Sandilands had been seeking from the company for the termination of his 10-year contract.
The settlement does not resolve ARN's separate legal proceedings with Henderson, who is claiming compensation of at least $82.25 million, and that matter remains ongoing.
The staggered payment structure of the Sandilands settlement limits the immediate cash impact on ARN's balance sheet.
Shares in ARN Media were trading at 26c at 3pm (AEST).
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