O’Reillys to gain from any deal at INM

IT is strongly believed that any refinancing deal achieved by Independent News & Media (INM), regarding its unpaid €200m bond, will end up with the O’Reilly family effectively retaining control over the publishing group.

INM’s share price shot up by just under 10% (2c) to 29c yesterday on speculation that the group’s board, led by chief executive Gavin O’Reilly, was getting closer to a deal with bondholders, after six months of unsuccessful bargaining. It seems that the refinancing deal will involve between €100m and €120m of the outstanding debt being swapped for around a 45% stake in the company

In addition, a rights issue could result in raising a further €100m to pay off the outstanding balance of the bond, which was originally due for repayment back in May. Yesterday’s share price movement followed a near 15% fall on Monday after speculation that a like-minded deal was pending.

“If agreed, and all shareholders participated, then that would see the O’Reilly family essentially retain control, assuming that the bondholders did not take up their rights. At the very least, it does appear that some consensus is emerging ahead of the latest standstill extension, which is due to expire on Friday, but given past criticism, we would expect opposition from the O’Brien camp,” said Goodbody Stockbrokers analyst Gerry Hennigan, in part reference to INM’s second largest individual shareholder, Denis O’Brien who has opposed most of the group’s management stances in the past couple of months.

INM has not commented on the status of its talks with bondholders this week, other than to say that “discussions towards a consensual conclusion are ongoing”. No comment was forthcoming from Mr O’Brien yesterday, either.

Meanwhile, an extraordinary general meeting, seeking the 50.1% shareholder approval needed for the conclusion of the €98m sale of the group’s South African-based outdoor advertising asset, is expected to take place next month.