O'Reilly tries to broker compromise on IN&M

INDEPENDENT NEWS & Media (IN&M) chief executive Gavin O’Reilly is making fresh efforts to reconcile the competing interests of key investor Denis O’Brien and bondholders over proposals to resolve the company’s failure to repay a €200 million note due since May.

The attempts to broker a compromise follow Mr O’Brien’s public rejection last week of IN&M’s latest proposals to break the deadlock.

Three of Mr O’Brien’s top lieutenants joined the INM board only recently so his refusal to back the pact is widely seen as a reflection of discord between his camp and the management team. “The key stakeholders are working together to get the best outcome for the company,” INM’s spokesman said when asked about the position of the company’s shareholders and management.

For years an ardent critic of IN&M and its strategic direction, Mr O’Brien set aside his public differences with the firm’s largest shareholder, Sir Anthony O’Reilly, in March when they publicly agreed to work together in the business. Sir Anthony retired as chief executive as part of this arrangement was succeeded by his son Gavin O’Reilly.

IN&M and its bondholders – among them Pioneer, Invesco and Aviva – were said to have been very far apart until the bondholders softened their stance in recent days. The proposed pact, however, is predicated on Mr O’Brien’s support and he is still refusing to invest additional funds on the basis that the terms on offer represent a “band-aid solution where major surgery is required”.

Arguing for further writedowns by bondholders on the basis that the current proposals are too generous to them, Mr O’Brien has communicated his dissatisfaction in two letters to the company.

Although there was no comment yesterday from Mr O’Brien’s camp, he has argued that his stance is in the best interests of all shareholders in the company.

While last Friday’s extension of a “standstill” period over the €200 million bond until July 24th gave Mr O’Reilly additional time to broker a compromise, the extent to which the company, Mr O’Brien or the bondholders are willing to modify their positions remains unclear.

In a private letter on June 18th to an ad-hoc committee of bondholders, Mr O’Reilly acknowledged that the company’s proposals did not deliver to each stakeholder individually their original expectation in full. “As such, this proposal is framed as a pragmatic and sensible compromise position.”

INM’s spokesman said last night that the terms on offer on June 18th had since changed. “It’s an old proposal and no longer relevant.”

However, an indicative term sheet on that date said engagement by the parties on such conditions would facilitate the approval of an extension to the standstill.

Although INM has not publicly acknowledged that its 20.7 per cent interest in Indian publisher Jagran Prakashan (JPL) is on the block as part of its efforts to raise up to €150 million from asset sales, the JPL stake is listed in the June 18th term sheet beside three other assets that are on the market.

The other assets for sale are South African advertising business INM Outdoor and INM’s interests in price comparison firm Verivox and gaming software firm Cashcade.