Tuesday, February 9, 2010 Previous editions
Friday, June 26, 2009
INDEPENDENT News & Media is tottering on the brink of bankruptcy as its second largest shareholder, Denis O’Brien, wants the company to play hard ball with its debtors and implement major surgery.
The board of Independent News & Media and its creditors have agreed an extension to a "standstill" on repayment of a €200m bond.
People familiar with the situation, said the agreement to extend the standstill, due to expire today, was reached after bondholders rejected the latest offer from the Dublin-based newspaper publisher on how to restructure the bond.
On Monday, the publisher of the Irish Independent said it would hold a deeply discounted rights offer, which an industry source told Reuters would be for up to €60 million. Crucially, the plan did not have the backing of Denis O’Brien, the second largest shareholder.
"There is no point putting together a band-aid solution to a problem that requires major surgery," he said.
"My fundamental concern is that, if this is not properly addressed... the company will be back looking for additional capital in six months," he added.
Under the plan, drawn up by the biggest shareholder, Anthony O’Reilly, bondholders would receive €60 million from the rights issue and up to €50 million from planned disposals. The remaining amount would have been made up by giving creditors 10% of the company’s shares.
INM covenants on a further €653m debt, held by a syndicate of eight banks and secured on the company’s Irish and British assets, are also under pressure.
The company made a pre-tax loss of €161.4m in 2008, when revenue fell by close to 12% to €1.48bn as advertising sales fell.
It issued a profit warning earlier this month, as it revised its forecasts for 2009 operating profits to €180m-€210m, down from €200m-€230m issued just weeks earlier.
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