GAVIN O’REILLY, the incoming chief of Independent News & Media (IN&M), has said the company is no longer trying to sell its 39 per cent interest in Sydney publisher APN News Media.
IN&M received two offers for the stake late last year but failed to execute a sale, blaming the credit crunch on the capacity of potential buyers to raise funding for any transaction.
The company is currently seeking a “standstill agreement” from the holders of a €200 million bond due this month as it seeks to extend the maturity of the bond and a further €590 million in debt due this year and next.
IN&M warned last week of a “strong likelihood” that the business will breach its banking covenants “if an amendment or waiver is not granted by the lenders in advance”, but its directors said they were confident that an agreement could be reached with its bondholders and banks.
Mr O’Reilly, who is APN chairman and who takes the helm at IN&M this week from his father Sir Anthony O’Reilly, indicated at APN’s annual general meeting of shareholders yesterday that IN&M was happy to remain a long-term shareholder in the business.
“I don’t have a for-sale sign on our stake in APN – I want to make that clear,” he said. “We dont want to sell.”
He downgraded APN’s profit forecast in light of worsening conditions in its core market, a reduction that follows last week’s lower profit forecast for the INM business at large.
“As we look forward, it is important to remember that it is our markets that are challenged; whereas our products and franchises remain strong and are generally holding their market share, with costs well down on the prior year,” Mr O’Reilly said.
“When releasing the 2008 full year results in February, the board indicated that net profit after tax (pre-non recurring items) for 2009 was expected to be around 20 million Australian dollars [€11.14 million] lower than the 2008 result of 140 million Australian dollars, with the majority of the shortfall occurring in the first half . . . Whilst it is difficult to forecast with confidence due to the current market conditions, directors now expect that, assuming advertising and credit markets do not deteriorate further, the full year NPAT (pre-NRI) to be in the range of 100-110 million Australian dollars,” Mr O’Reilly said.
