INM plan offers staff 54% of pension

Independent News and Media is attempting to plug the €162 million hole in its pension fund that could pay out only about 15% of what pensioners need if it were wound up today.

The company presented workers with a plan that would see recipients get 54% of what they were expecting when they retire, if the company returns to profitability. The major restructuring of the pension scheme will see the retirement age rise to 67 or 68.

The plan would also see workers take a 5% shareholding in the company that publishes the Independent, Sunday Independent, the Irish Daily Star and the Herald.

The proposals have not yet been accepted by workers and there are a number of moving parts in the plan that would allow workers to keep 54% of their entitlements.

It is understood that the company will inject €60m into the pension fund for workers in the Republic of Ireland and a further €20m into their operations in the North over the course of the next 11 years.

A spokesperson for Independent News and Media declined to comment.

The news come days before INM shareholders are set to meet to vote on the group’s recently announced debt restructuring of €420m and the sale of its South African assets.

The complex deal, which would see the company offload its South African operations if accepted, would reduce the company’s overall debt burden by €140m.

The main element of the plan, which has been speculated upon for a number of weeks but was only formally announced yesterday, would see a consortium of eight banks (including Bank of Ireland, AIB, Barclays, Lloyds, ANZ and RBS) write off €138m of outstanding debt, in return for a combined equity stake of between 11% and 16%.

INM would also use the €167m or so it gets from the sale of its South African operations to drive debt down further and plans to raise extra capital — via a rights issue — to enable €40m to be paid off the debt before the end of this year.

However, if the rights issue is not completed, INM’s lenders will write off only €106m of their combined debt, in return for a much larger 70% of the group.

In all, INM’s net debt will be reduced to €118m on the back of this plan, bringing the group’s net debt- to-EBITDA ratio into a targeted range (of debt being three times earnings), while the group’s remaining debt maturity will be extended for five years to the beginning of April 2018.

The “very positive development”, according to INM chief executive Vincent Crowley, will put the group “on a secure financial footing, with a sustainable debt level and an ability to implement a restructuring of the business”.