INDEPENDENT NEWS & Media (IN&M) is in talks about a third extension to its “standstill” deal with bondholders and banks over its failure to repay a €200 million bond last May.
Formal proposals for a fresh extension of the pact will be discussed on a conference call today between the company and its banks and bondholders.
The current standstill expires on August 27th, a day before IN&M publishes interim results. Any extension could well run into September, a month in which €50 million of IN&M’s bank debt falls due.
In light of that, the end of the current standstill was seen as an effective deadline for a deal as IN&M’s position would weaken further if bank debt went overdue on top of an overdue bond. Still, close observers of the process believe that any new standstill extension would also reflect weakness on the part of bondholders.
IN&M chief executive Gavin O’Reilly has been seeking for months to reconcile the competing interests of key investor Denis O’Brien and bondholders.
Although a new extension would be required to facilitate the legal processing of any deal between IN&M and its bondholders and banks, it is believed that a definitive formula acceptable to all camps remains elusive.
Progress has been reported on a number of occasions, but Mr O’Brien has publicly rejected previous proposals from the company. While Mr O’Brien has also said examinership is an option for IN&M, sources close to him insist that he was not seeking to stymie a deal.
His stance is that some of the proposals represented a band-aid solution where “radical surgery” was required. Mr O’Brien also declared recently that he opposed the sale of South African advertising company INM Outdoor, a unit long mooted for disposal
Such interventions have led bondholders to conclude that there was little prospect of him signing to any of the terms they found acceptable. Bondholder sources have said it would be possible to secure a deal with IN&M management and that such a deal could bypass Mr O’Brien.
Although three of Mr O’Brien’s closest associates are on the IN&M board, bondholder sources believe these directors could not block a package acceptable to other IN&M stakeholders. The banks involved include AIB, Bank of Ireland, Barclays, BNP Paribas, KBC Bank Ireland, Lloyds TSB and Ulster Bank, as well as ANZEF and ANZ Bank (Europe), whose commitments were previously held by Australia and New Zealand Banking Group.
