The telecoms and media entrepreneur — INM’s second largest individual shareholder with a 26% stake — yesterday issued his own restructuring proposal for the group to INM’s eight-strong banking syndicate.
It came on the same day that the INM board formally confirmed media speculation that it was itself close to reaching an agreement over the refinancing of its overdue €200 million bond.
The INM statement said the board has yet to finalise a restructuring agreement but discussions “have advanced significantly”.
As previously mooted, its seemingly pending agreement with lenders includes a debt-for-equity deal which would give bondholders a stake — thought to be around 45% — in the group.
A rights issue would follow, removing the remainder of the outstanding bond debt.
However, it is understood that Mr O’Brien’s proposals — through a vehicle called RescueCo — would do away with the need of a rights issue by injecting €100m into the company and refinancing the rest of the bond debt and interest due through a mix of equity and cash.
His proposals also renew his calls for a halt to the sale of INM Outdoor in South Africa as well as the disposal of the British Independent newspaper titles.
The proposal would also result in the RescueCo vehicle acquiring a majority equity stake in INM — essentially giving Mr O’Brien control of the group.
A spokesperson for INM said that the board has received no proposal from Mr O’Brien. And the group’s statement said that its own “consensual restructuring proposal provides a materially better outcome for all stakeholders than any other alternative”.
One industry source suggested last night that bank/bondholder preference is likely to be with the INM board restructuring plan, going as far as to hint that Mr O’Brien’s proposals could be targeted more as a frustrating or stalling attempt rather than a bona fide takeover attempt.
It is thought, through the RescueCo proposal, the bondholders would get a smaller stakeholding in INM. And a large element of yesterday’s meeting was to discuss how much of the O’Brien-led investment would go into INM and how much would go directly to the bondholders.
However, the online investment analysis company CapitalStructure quoted what it called “a source close to the bondholders” as saying: “Mr O’Brien has said, historically, that bondholders should get nothing more than €60m of value and write off the other €150m+ of their claim. Unless he has materially altered that view, he has no prospect of bondholder support, which means the only way the deal is viable is through examinership.”
One Dublin-based media analyst added that Mr O’Brien’s actions were not surprising and that it would be fair to expect further “twists and turns” before a final refinancing deal for the group is concluded.
On RTÉ’s Prime Time last Tuesday INM group chief executive Gavin O’Reilly accused Mr O’Brien of flip-flopping his position with regard to the group’s lifeline.