The board of Independent News & Media has approved the transfer of up to €60 million in cash to its Belgian parent company by the end of this year.
Trustees of INM's pension schemes were informed recently that Mediahuis planned to transfer the funds "pre year end for debt repayment or onward investment".
This amounts to 75 per cent of the €80 million in cash available to INM, the trustees were told. Mediahuis acquired INM in July for €145.6 million.
The transfer forms part of what is described as a "revolving loan agreement". In a letter to the pension trustees, INM's company secretary, Mary Gallagher, said the Irish media group was a "material subsidiary" of Mediahuis and is "therefore required under the terms of their bank facility to sign up as a guarantor to their bank debt".
This was described as a "standard requirement" and was "consistent" with other Mediahuis subsidiaries in Belgium and the Netherlands, who are also guarantors.
The transfer of funds has been approved by the board of INM with approvals also needed from the boards of INM subsidiaries by the end of November, the letter stated.
The letter adds that INM now benefits from being part of a large publishing group with access to “funding, resources, know-how and a proven track record of transformation”.
‘Normal practice’
It added that the 2020 budget approved by INM’s board shows that it continues to be “both profitable and cash-generative for the forthcoming financial year and has sufficient resources available to continue to meet its financial obligations”.
“The group continues to perform strongly and is committed to managing its leveraging carefully to ensure that it has sufficient resources and comfortable headroom available under its financial covenants.”
In a statement to The Irish Times, Mediahuis said the cash transfer was normal practice for the group. “As part of a normal operational practice and being the integrated business that we are, Mediahuis manages bank financing as well as day-to-day treasury on a consolidated [group] level,” it said.
“So, as part of good treasury management, we don’t leave excess cash ‘obsolete’ anywhere within the group. We have formal cash-pooling procedures and contracts in place, and local business units within the group borrow and lend money, depending on needs and excess cash available. So this is in fact a very common practice for any group.”
The letter to the trustees noted that Mediahuis had previously confirmed that it would “fully safeguard the existing employment rights of employees, including in relation to pensions”.
In 2017 INM reached an agreement with pension trustees to make phased contributions of more than €50 million to two defined-contribution schemes.
