The company which publishes the Sunday Tribune, Tribune Publications plc, has converted loans of more than £15 million (€19 million) owed to Independent News & Media plc, into 4 per cent cumulative redeemable preference shares.

The chairman of the company, Mr Gordon Colleary, said yesterday the company "is poised to return to an operating profit" and hopes to be able to pay the 4 per cent dividend on the new shares. He said it will now be difficult for the company to seek further loans from shareholders.

Speaking after an a.g.m. which voted in favour of the change, Mr Colleary said the conversion of the debts will put the company "on a sound financial footing and establish its financial independence once and for all".

The company has received legal advice that the change does not require notification under competition law. "This is less restrictive on the company," Mr Colleary said. KPMG had advised that the change will improve the company's balance sheet.

The company, which reported a £1.75 million (€2.22 million) loss last year, before interest charges of £900,000, is hoping to break even or make a modest profit this year, Mr Colleary said. "If we could repeat that improvement, or half that next year, we would be pleased. That is what we are trying to do." The company did not borrow money from the Independent group last year.

The new arrangement means the company needs approximately £600,000 per year to pay the dividends on the preference shares. The Independent group already owned 29.9 per cent of the company's 2.8 million issued £1 ordinary shares.

Directors and shareholders loans to the company were repayable on demand and bore interest at 6.125 per cent.

Mr Colleary said the time was right for the move because the newspaper's sales were up, advertising was up and for the past four months the company had been producing a small profit. "While the standing of the Sun- day Tribune will be further enhanced by a properly restructured balance sheet, overall the future of the company is very positive." Total revenues were 35 per cent ahead of last year.

Mr Colleary said it wasn't possible to convert the Independent loans to shares until the company was trading profitably. He said there had been extensive conditions associated with the loans and the company "couldn't sneeze" if the owner of the loan notes didn't want it to. No such conditions applied to the preference shares.

He said there had been a perception that the company was under the control of the Independent group, though the board had never felt this to be the case. Yesterday's development got rid of this perception, Mr Colleary said.

The resolution passed yesterday stipulates that the company and the Independent group may agree when the company redeems some of the 4 per cent cumulative shares and that all the shares should be redeemed before April 30th, 2011, unless both parties agree to a later date.

The company's trading loss for the year to June 30th, 2000, was 61 per cent up on the previous year, according to the company's annual report for that year. Total debts were £17.13 million. The return made up to December 31st, 2000 recorded total indebtedness of £18.5 million.