Independent News board urges shareholders to shoot down O'Brien proposal

Thursday 8th October 2009

The board of Independent News & Media, the Irish-based parent company of APN News & Media, is urging shareholders to shoot down a proposal that would severely curtail its powers after it secured an agreement from bondholders for a debt-for-equity swap.

INM’s board is vigorously opposing a proposal put forward by the second-largest shareholder, Denis O’Brien, to revoke the authority of the board to issue new shares and nominate three directors sympathetic to his view.

The board said the move would undermine its authority and put the restructuring arrangement at risk.

O’Brien has previously offered to inject cash into the debt-laden company. INM has entered into a formal agreement with bondholders to swap 123 million euros of bonds for an equity stake of about 46%.

"The board strongly believes that it would be detrimental to the interests of the company and its stakeholders to revoke the board’s existing authority to issue shares, thereby imposing significant limitations on the board’s future ability to act,” the board said in a statement. “

Billionaire Tony O’Reilly’s INM, the parent of Australia’s APN which publishes the NZ Herald and operates the Radio Network, is under pressure to repay some 1.4 billion euros of debt racked up by an aggressive acquisition of global media companies.

O’Reilly hopes to restructure the company in such a way as to safeguard his family’s stake of almost 30%. The current proposal will water their holding down to 15% or lower.

Shares of INM soared about 18% to 23 euro cents, having tumbled 82% in the past 12 months. The stock has an average rating of ‘outperform’ based on seven analyst recommendations compiled by Reuters.

Last week INM secured another month’s extension to its bank and bond terms, buying time to thrash out the agreement with bondholders and lenders. Under the proposal, the banks will extend their credit lines to the media company for four-and-a-half years and ease covenants in return for an increase in interest paid on the loans.

APN’s shares were unchanged at $2.56 in trading today, and have declined 14% this year.

Businesswire.co.nz

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