INM likely to sell €34m stake in Indian group

INDEPENDENT News & Media (INM) is likely to sell its remaining €34 million interest in Indian media group, JPL, in order to further reduce its debt levels, according to analysts.

Tue, 30 Mar, 2010 - 01:00

Geoff Percival

In a research note, issued yesterday, detailing an upgrading of its earnings forecasts for the Irish media group, Davy Stockbrokers said that it expects INM to raise a further €34m by selling out of the Indian group.

INM originally bought a 20.8% stake in JPL (Jagran Prakashan Ltd) in 2005, reducing this by 7.3% in July of last year – as part of its high profile debt reduction and financial restructuring drive.

Earlier this month, INM raised a further €42m via the sale of another 7.8% in JPL – a move which reduced its overall stake to 5.7%; which was valued at around €33m.

At INM’s full-year results presentation last week, group chief executive Gavin O’Reilly suggested that further asset disposals may not be at the centre of ongoing debt reduction plans.

On INM’s future involvement with JPL, Mr O’Reilly declined to comment, on account of the Indian group being a publicly quoted business in its own right.

However, in its note, Davy said: “The group [INM] has successfully disposed of its London Independent titles, earning a pay-back of less than one year.

“We also expect the group to further dispose of its stake in JPL, which should generate an additional €34.1m.”

Davy added that it is upgrading its 2010 earnings (EBIT) forecasts for INM by €14m, “supported by favourable foreign exchange rates”, adding that valuation analysis “implies a share price of between 17 cents and 20c. It also said that it is upgrading the INM stock to an “outperform” recommendation.

INM’s share price was hovering around the 12c mark, yesterday.

The group announced the sale of its loss-making London newspapers – the Independent and Independent on Sunday – to Russian businessman Alexander Lebedev for a nominal £1, last week, adding that it would contribute £9m (more than €10m) in working capital to the titles over the next 10 months.