Media group to agree debt reprieve

INDEPENDENT News & Media (INM), battling to stave off bankruptcy, is set to agree a third reprieve on its obligations to pay back €200 million of its €1.4 billion debt by Friday, industry sources predicted last night.

Shares in the company fell by as much as 20% in early morning trade on the Dublin Stock Exchange yesterday but rallied as it emerged that a third agreement with bondholders on the repayment of €200m in debt is set to be agreed this week. The shares closed down 15.6% at 21.1 cents placing a stock market valuation of €177.15m on the company.

INM has been trying to make an agreement with bondholders for months and first agreed a standstill on the repayment of €200m in May that ran until June 26. The company, which owns the Irish Independent, next agreed a further extension until July 24. It is likely the latest agreement will expire before the end of August as the deadlock between INM and its creditors continues.

Efforts by management to work a way out of the situation have failed to win the support of creditors or the significant INM shareholder, telecom magnate Denis O’Brien.

Sources close to significant shareholders say the company could be facing examinership if a solution to the ongoing impasse is not negotiated and they add that repayments of a further €653m debt will have to be tackled by the company after 2009.

Denis O’Brien, INM’s second largest shareholder, is on record as saying: “There is no point putting together a band-aid solution to a problem that requires major surgery.”

“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.

Earlier this month INM raised €22m after selling off 22m shares of its stake in Indian media giant Jagran Prakashan.

The proceeds of this sale were used to pay-off the €15m working capital facility that INM secured from its banks when the standstill agreement was first agreed in May. This was secured against company assets.

INM is also is in line for a £20m (€23.12m) cash injection after a deal was agreed for its minority- owned Cashcade online gaming business to be sold to Party Gaming.

INM made a pre-tax loss of €161.4m in 2008, when revenue fell by close to 12% to €1.48bn as advertising sales fell.

The company issued a profit warning in early June, as it revised its forecasts for 2009 operating profits to €180m-€210m, down from €200m-€230m issued just weeks earlier.