BONDHOLDERS IN Independent News & Media (IN&M) are working towards a common stance in their dialogue with the firm over its inability to make a €200 million repayment due on Monday week.
In a sign that talks between both sides are moving into their final phase, the bondholders are widely expected to appoint international investment bank Houlihan Lokey to advise them on whether they should grant an extension of the debt to IN&M.
The bondholders are scheduled to discuss their negotiating position in a conference call next Monday, amid fresh expressions of confidence from some sources with knowledge of the discussions that a resolution can be found.
The holders of the bond include Pioneer, Invesco and Aviva.
The prime movers on the other side of the table are IN&M's dominant shareholders, former rivals Denis O'Brien and Sir Anthony O'Reilly, who may have to provide personal guarantees to the company in any new refinancing deal.
In the face of mounting pressure from IN&M's banks after a sharp decline in the company's share price, the two men agreed in March to set aside their differences to work together in the best interests of the company.
IN&M has been seeking a "standstill agreement" with bondholders as it seeks to extend the maturity of the €200 million debt and that of a further €590 million due later this year and next.
Another €591 million is due in 2012.
Although IN&M has warned of a "strong likelihood" that the business will breach its banking covenants "if an amendment or waiver is not granted by the lenders in advance", its directors have said they are confident an agreement can be reached with bondholders and banks.
If a standstill is agreed, IN&M would use the period of grace to step up efforts to deleverage its balance and sell assets.
One of the prime options under discussion with bondholders is an extension of the bond's maturity in exchange for a small cash repayment and enhanced credit terms. The existing €200 million 10-year bond carries an annual coupon of 5.75 per cent, a rate IN&M may have to exceed by double or more to strike a rollover deal with bondholders. IN&M may also require bridging finance from banks.
With some of IN&M's main newspaper titles already pledged to its banks, a deal may involve Sir Anthony and Mr O'Brien being asked to provide liens or security over their personal assets to bondholders.
IN&M expects to raise €100 million to €150 million from the sale of its interests in price comparison firm Verivox, gaming software firm Cashcade and its South African outdoor advertising business by the end of the third quarter.
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