The group has drawn up a complex restructuring plan which will see its core debt burden reduce from over €420m to a more sustainable €118m, while it is also in advanced discussions with trustees to reduce its €162m pension scheme deficit. The main element of the plan — speculated upon for a number of weeks but only formally announced yesterday — will see the consortium of eight banks (including Bank of Ireland, AIB, Barclays, Lloyds, ANZ and RBS) write off €138m of outstanding debt, in return for a combined equity stake of between 11% and 16%.
INM will also use the €167m or so it gets from the sale of its South African operations to drive debt down further and plans to raise extra capital via a rights issue, to enable €40m to be paid off the debt by the end of this year.
However, if the rights issue is not completed, INM’s lenders will write off only €106m of their combined debt, in return for a much larger 70% of the group.
In all, INM’s net debt will be reduced to €118m on the back of this plan, bringing the group’s net debt-to -EBITDA ratio into a targeted range (of debt being three times earnings), while the group’s remaining debt maturity will be extended for five years to the beginning of April 2018.
The “very positive development”, according to INM chief executive Vincent Crowley, will put the group “on a secure financial footing, with a sustainable debt level and an ability to implement a restructuring of the business”.
“On completion of all stages, it is a balanced outcome where all stakeholders have an interest in the group, which is financially well positioned to deal with the challenges and opportunities arising in the media space,” Mr Crowley added.
INM also published its annual results for 2012 yesterday, which showed a 3.3% fall in group revenue to €539.7m. While the group made an operating profit of €59.7m, before exceptional costs were factored in (down by nearly 21% on the €75.5m generated in 2011) its pre-tax losses rose from €63.6m to nearly €255m. Losses per share ballooned by 500% to 44.5c.
Management said trading conditions have continued to be challenging since the turn of the year, with group revenue down by 10.4% year-on-year so far in 2013, circulation revenues dropping 8.8%, with advertising revenues down by 13.4%.