Independent News gains more breathing space from banks

Tuesday 29th September 2009

Independent News and Media, the Irish-based parent company of APN News and Media, won another month’s extension to its bank and bond terms, buying more time to sell assets and repay debt.

Billionaire Tony O’Reilly’s media company, INM, owns 39% of Australia’s APN, which publishes the New Zealand Herald. The parent is now under pressure to repay some 1.4 billion euro of debt racked up in an aggressive acquisition of global media companies.

O’Reilly is pushing for a debt restructuring that would safeguard his family’s stake of almost 30% in the company though the proposal currently before the board would see the stake watered down to 15% or less.

The INM board has agreed to cut group debt via a debt-for-equity swap in which its bondholders would convert 123 million euros of bonds for an equity stake of about 46%, according to the Financial Times. Under the plan the banks would extend their credit lines to INM for four and a half years and loosen covenants in order to give the company time to recover.

The banks are expected to receive an increase on the interest paid on their loans. In keeping with most newspaper publishers, INM has been hit by recession-led decreases in advertising revenue, while classified advertising has been bleeding to on-line platforms such as the TradeMe.co.nz auction site.

Over the past few months INM, its bankers and bondholders have been at a standstill while negotiations have been in progress. Various proposals have been put forward, including offers of cash-injections from INM’s second largest shareholder Denis O’Brien, and the sale or closure of loss making newspapers such as the UK's Independent.

INM says it has sufficient funding to meet all working capital requirements during the standstill period. The latest announcement provides an extension until 31 October.

Shares of APN, which posted a 53% drop in first-half profit, fell 1% to A$1.99 on the ASX today.

Businesswire.co.nz

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