Irish Press plans offer to buy back 11% of its shares

Irish Press plc is proposing to buy back up to 100,000 ordinary shares from existing shareholders at a price of 250p per share.

This follows an exceptional gain from the sale of its remaining stake in the Press Association (PA) and the part repayment of a loan, which led to a profit before tax of £1,262,000 in the year ended March 31st, 1998, contrasting with a loss of £68,000 in the previous year.

The Irish Press chairman, Mr Vincent Jennings, said the "directors have been, for some time, anxious to return value to shareholders. After much consideration, they have decided that instead of a dividend, it would be better to offer shareholders an opportunity to sell some or all of their holding back to the company". The proposed buy-back represents 11 per cent of the equity.

None of the three directors, including managing director and secretary Dr Eamon de Valera, who has a controlling 50.4 per cent stake, is accepting the offer.

The purchase price represents 81 per cent of the net assets value per share at March 31st, 1998. However, the group has noted that it has no distributable reserves and it would have to take legal measures to reverse this position so that the purchases can be made. Mr Jennings said the board believes that the proposal is fair and reasonable as it gives shareholders, particularly smaller ones (those with 20 shares or fewer can opt to sell their entire holdings), the opportunity to sell their shares if they so wish.

Irish Press has about 7,000 shareholders, most with small holdings, and some are untraceable. It is the holding company for Irish Press Newspapers (IPN), which published three newspaper titles and has been dissolved. Irish Press has come in for strong criticism from its shareholders. Mr Jennings, at last year's annual general meeting, ruled out a shareholder resolution to liquidate the company because it no longer fulfils the function for which it was formed. He said the resolution could not be accepted because the board had not been given 21 days' notice. Another resolution unsuccessfully opposed the re-election of Mr Jennings as chairman. With this year's a.g.m. scheduled for early next month, the share purchase proposal can be seen as a move to placate the shareholders. The Irish Press directors have stressed that they intend to make no recommendation on the share purchase. Shareholders will be asked to approve the scheme at an extraordinary general meeting, immediately after the a.g.m., on December 9th. However, payment is not expected until April 1999.

Mr Jennings said it is difficult to predict the future of the company. Its only assets are investments (valued at £2.2 million last March) and so far it has failed to find another activity. He noted that the Irish Press had been invited to invest in another venture but that, "after careful consideration", it had declined. Another investment opportunity is said to be currently under examination.

Mr Jennings revealed that the group had received two approaches for the newspaper titles owned by Irish Press Publications, the subsidiary in which it has a 75 per cent stake.

"One has not gone beyond a preliminary expression of interest in purchase," he said. "In the second, discussions have taken place and some detailed work has been done." However, he added that none of this is certain to lead to publication or to the company playing a part in such a venture. The group's High Court action against investment bankers EM Warburg Pincus & Co International is said to have reached an advanced state of preparation. Irish Press is seeking substantial damages and expects hearings to start next year.

However, there is a claim for £893,408 against the group by the trustees of three pension schemes. No provision has been made for this contingent liability because the directors do not believe the company has any liability.

The latest results show a net gain of £1,131,000 from the sale of its stake in PA and a recovery of £437,000 from a £688,000 loan to IPN. There was also a net income/interest of just £35,000, which would have been insufficient to meet the group's running expenses of £341,000, down from £421,000 a year earlier. Since the year end, the company has acquired Irish Press Archives (formerly Sarzeau), which owns the newspaper archives. It had previously enabled Sarzeau to repay a loan of £66,000 to Independent Newspapers.

"Apart from their historical importance, the archives could have a commercial value," Mr Jennings said.