Investors could face €500m losses on EMPG

IRISH investors could face losses of close to €500 million as the Education Media & Publishing Group (EMPG), controlled by Barry O’Callaghan, faces a major restructuring of its $7bn-plus crippling debt.

Private investors who sank an estimated €240m into the group have been informed by Davy Stockbrokers that their money has been wiped out, it is understood. Davy did not return our calls.

It is also reckoned O’Callaghan may face losses of up to €250m in the restructuring.

It is feared that Irish shareholders would lose all of their investments as a result of the debt crisis threatening its survival.

“Many of these investors were funded through large loans from Anglo Irish Bank, which is now wholly owned by Irish taxpayers,” said Fine Gael TD George Lee.

He said he knew of one investor who had been told that his €1m investment was gone, he said.

He also raised doubts about the prospects of some of the 450 jobs announced in September 2008 by an EMPG subsidiary to deliver e-learning R&D development programmes in south Dublin.

This is a €350m investment and Enterprise Ireland allocated the “largest grant” in its history to support it. An EI spokesman said the project was on schedule.

The group, formerly known as Riverdeep, publishes a range of educational products. It confirmed last night that the restructuring talks were underway.

Led by the 39-year-old O’Callaghan, a former banker from Cork, EMPG owns Houghton Mifflin Harcourt, a major US educational publisher.

The group said: “We are in advanced discussions regarding a comprehensive, consensual balance sheet restructuring.”

Certain lenders have committed to “make substantial new investments in the company in connection with this restructuring”, the statement said.

“The plan will enhance liquidity and the company expects to have over $600m of new working capital to support growth initiatives,” it said.

Last night the company put a brave face on the deal saying it was business as usual for the group.

“These developments have no adverse effect on our day-to-day operations, on our employees, or on the nature and quality of the services we provide to our customers and business partners,” it said.

Barry O’Callaghan and the senior management team will continue to lead the company following the implementation of the restructuring plan.

The company said it would continue to honour the terms of the Enterprise Ireland contract.