Breathing space for Independent News & Media owner
Published 18/05/2009 | 14:03
The owner of the Independent and Independent on Sunday said today it had secured vital breathing space in its negotiation with investors.
Independent News and Media (INM), which owns more than 200 newspaper and magazine titles across the world, including the Belfast Telegraph, said it agreed a standstill arrangement over a 200 million euro (£177.5 million) bond due to be paid back today.
The group said it now has until June 26 to reach a deal with bondholders and has agreed a further 15 million euros (£13.3 million) of working capital from its banks for the standstill period.
INM, which warned last month that it would not be able to meet today's deadline, said the standstill would "allow ongoing constructive discussions" to continue over the group's financial restructuring.
During the period the company is protected from claims by the banks and bondholders who signed up to the agreement while it attempts to sort out its finances.
The company said the standstill period could be extended beyond June 26, but only with the consent of the banks and bondholders involved.
It is understood that options under consideration in the discussions include INM paying bondholders back 70 million euros (£62 million) now with the remainder of the bonds "rolled over" to be paid back at a later date.
Its new working capital facility is to be repaid from asset disposals - thought to include the sale of its South African outdoor advertising business, its stake in the Verivox utility price comparison website in Germany, and the Cashcade gaming website in the UK.
The group warned last month that while it still remained profitable, it was in danger of breaching lending terms.
INM also conceded that there was "significant doubt" over whether the entire company could continue as a going concern.
But it said that despite uncertainties caused by the economic downturn and its difficulties raising debt, it expected the group would have "adequate resources to continue in operational existence for the foreseeable future".
The group's titles have suffered, along with the rest of the media industry, as advertising revenues plummet in the economic downturn.
The group swung to a pre-tax loss of 161.4 million euros (£142.7 million) in the 12 months to December 31, a deterioration of 165% on the previous year.
But this includes exceptional costs of 373.1 million euros (£329.9 million) relating to impairment charges linked to the economic downturn.
Major restructuring at the Independent and Independent on Sunday has involved the loss of 90 jobs, mainly in the editorial departments, and a move to Kensington, west London, where they now share office space with Associated Newspapers.
The restructuring and deal with Associated Newspapers, which publishes the Daily Mail and Mail on Sunday, is forecast to deliver around £10 million in annual cost savings.