Independent under pressure to strike deal on €200m loan

INDEPENDENT NEWS Media (INM) is racing to strike a difficult deal with bondholders on the refinancing of a €200 million note due within a month before releasing final results for 2008 tomorrow week, the deadline under EU rules for publication of its annual report.

Having put back the release of the results for a second time in two months on Monday, INM is said to be coming under considerable pressure as detailed discussions proceed with holders of a bond maturing on May 17th.

The company is examining asset sales to raise cash, with the possibility of the disposal of its 20.8 per cent interest in Indian newspaper publisher Jagran Prakashan emerging in recent days.

INM shares, down almost 90 per cent in 12 months, closed 1½ cent weaker last night at 21 cent, a price that implies a market capitalisation of €176.25 million.

According to informed sources, one of the main options under discussion with bondholders is an extension of the bond’s maturity in exchange for a small cash repayment and enhanced credit terms.

With some of INM’s main newspaper titles already pledged to its banks, this may involve the company’s dominant shareholders being asked to provide liens or security over their personal assets to bondholders.

However, the extent to which outgoing chief executive and 28.5 per cent shareholder Sir Anthony O’Reilly and and 26 per cent shareholder Denis O’Brien can do that is unclear. Sir Anthony has lost hundreds of millions of euro in the collapse of INM’s share price. With his brother-in-law Peter Goulandris, he lost some €400 million in the collapse of Waterford Wedgwood. For his part, Mr O’Brien is nursing the loss of some €500 million on his INM investment.

In the face of mounting pressure from INM’s banks and bondholders, the two men set aside their public dispute last month and pledged to work together in the interests of the business.

As investors debate whether to extend maturity of the bond, sources indicated that they have been seeking reassurance about the trading performance of the business as it weathers recession in Ireland and further afield. At issue here is the capacity of the company, which has an additional €590 million in debt falling due next year, to meet any new financial obligations.

Also under discussion in recent times has been the possibility of a debt for equity swap. Such a manoeuvre would dilute the interests of Sir Anthony and Mr O’Brien.