BONDHOLDERS IN Independent News & Media (INM) stand to receive 10 per cent of the proceeds from key asset sales under the company’s proposals to settle liabilities triggered by its failure to repay a €200 million note in May.
IN&M is selling its South African advertising business, IN&M Outdoor, and its interests in price comparison firm Verivox and gaming software firm Cashcade. It hopes to realise up to €150 million from these sales later this year, meaning bondholders would receive up to €15 million. The payment would be addition to a €30 million contribution from IN&M’s prime investors, Denis O’Brien and Sir Anthony O’Reilly.
The proposals are in a renewed offer to an ad hoc committee of bondholders, submitted by INM ahead of the expiry on June 26th of a “standstill” deal. A 21-day notification period in respect of any pact means the standstill will have to be extended until any deal takes effect.
The coupon on the outstanding bond balance is likely to rise above the 5.75 per cent on the original bond in any deal and its maturity would be pushed out in line with an extension of “three years plus” on IN&M’s other debt. IN&M owes another €590 million, due later this year and next. A further €591 million is due in 2012.
Newly installed chief Gavin O’Reilly said after the IN&M agm yesterday that all stakeholders were working in a constructive way to resolve the issue “because quite frankly the alternative is just too appalling”. INM chairman Dr Brian Hillery said the company’s board believes it can reach terms “acceptable to the group and fair to all parties”.
Shares in IN&M, down almost 85 per cent in 12 months, gained more than 15 per cent to close at 28.2 cent. The agm was told, however, that IN&M has downgraded its pre-exceptional operating profit forecast for 2009 to between €180 million to €210 million from the €200 million to €230 million range mooted in April. The downgrade was attributed to weak advertising revenue, down 30 per cent in Ireland and down 20 per cent in Britain.
“We don’t see much positive news out there on the advertising front,” Mr O’Reilly said. Contrary to some reports, he said IN&M has received no offer for its London Independent titles from Russian billionaire Alexander Lebedev.
Mr O’Brien said he hoped the refinancing issue is resolved without delay. “If IN&M is to fulfil its potential and be successful, we need the management focused on running the business, not distracted by a prolonged refinancing issue that should be resolvable with a dose of common sense,” he said.
Mr O’Reilly declined to say whether he believed bondholders were being unreasonable, but said comments by “other shareholders” reflected frustration that the negotiation was like a game of “financial chicken”. “I think what we want over the next two weeks is everybody to clearly set out where they are and try and find a positive resolution,” he said.
Mr O’Brien’s close associates Leslie Buckley, Lucy Gaffney and Paul Connolly were elected to the INM board yesterday. Each of them joined in the applause when Mr O’Reilly praised the contribution to INM of his father, Sir Anthony O’Reilly, whose recent retirement as chief executive followed an accord with Mr O’Brien.
In an attempt to curtail costs, IN&M has offered more than 500 editorial and other staff in its Irish unit an opportunity to take unpaid leave for six months or more.
