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The sale of LNR comes as GWR continues to pursue its strategy of focusing on its core assets in UK radio, to reduce group debts and take advantage of the opportunities presented by the proposed changes in the forthcoming communications bill.

LNR operates the ITN News Direct FM station and the LBC AM station. For the year ended 30 September 2001, LNR reported sales of £4.1m and a loss before tax of £2m, and had net liabilities of £7.1m.

GWR also announced the formation of a new dance music radio joint venture with SRH called Vibe. The new venture will be 51% owned by SRH and 49% by GWR.

GWR said it had exercised its option to purchase the 50.01% of Eastern Counties Radio that it does not own, and subsequently sold Vibe to VRSL, the new holding company formed with SRH.

The deal gives it control of dance music station Vibe FM, the regional radio licence covering the East of England.

The GWR/SRH joint venture will also acquire the entire issued share capital of Galaxy Radio Wales & West from Chrysalis as part of a separate transaction for £12.5m in cash. Galaxy operates the dance and R'n'B station Galaxy 101, the regional radio licence covering South Wales and the West of England.

Ralph Bernard, executive chairman of GWR, said: "SRH is one of the leading radio groups operating some of the most successful stations in the UK. We are very pleased to be entering this exciting phase of development in UK radio in partnership with SRH. Today's transactions remove a loss and cash-flow burden for the group and joins Vibe and Galaxy in a logical partnership to take advantage of their undoubted potential."

In a separate trading statement coinciding with the raft of deals, GWR said total group revenues are forecast to be flat for the six months to September 30. Like-for-like revenues are forecast to be down 2% year on year, but within that, Classic FM is up 8% over this period.

Over the six months, the group's debt has been reduced from £164m down to under £100m, principally following the disposal of its investments in Australia and in London News Radio.

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