AUSTRALIAN PUBLISHER APN News Media, in which Independent News & Media has a 39.1 per cent stake, is no longer the subject of a New Zealand tax audit that threatened the Irish plc with a tax bill of more than A$100 million (€50.62 million).
IN&M yesterday confirmed the audit had been discontinued.
It also announced that it has engaged advisers Rothschild and Davy Stockbrokers to enter into negotiations with the holders of bonds worth €200 million, which are due to be paid in May. The negotiations could involve discussions on renewed maturity dates and/or new terms.
The group is understood to be looking at the sale of some assets to see if it can raise funds to help it make the pending repayments.
Yesterday it said it would not be progressing with a suggested private subordinated bond to meet the maturity of the bonds in May “due to current negative conditions in credit markets”.
The New Zealand tax authorities were looking into an arrangement involving the sale and leaseback of APN mastheads. The abandonment of the audit means the possibility that the arrangement might have created a tax bill no longer exists.
Independent News Media said it was “pleased to confirm” the formal discontinuance of the audit into its tax treatment of its masthead licensing agreement.
“The decision confirms the taxation and accounting treatment adopted by both INM and APN in relation to the [agreement] and results in no additional tax being payable by either INM or APN.
“IN&M no longer has any liability to APN under the warranties it granted to APN at the time of the sale of Wilson Horton Limited to APN in 2001, and the tax indemnity falls away.”
APN chief executive Brendan Hopkins said he was “pleased” with the decision “and that the distractions of the six-year-long dispute are now behind us”.
APN used a deal to buy a New Zealand newspaper group, Wilson Horton, from INM in 2001 to sell and lease back intangibles including newspaper mastheads, apparently to allow it to claim tax deductions.
IN&M had, as Wilson Horton’s previous owner, indemnified APN over the masthead licensing arrangement that had attracted the attention of the New Zealand tax authorities. APN said yesterday that the country’s Inland Revenue Department had “decided to discontinue the dispute” relating to the tax treatment of this licensing arrangement.
