Group of creditors backs INM proposal

A NUMBER of Independent News & Media (INM) creditors have formally backed the group’s restructuring proposal that will see them receive 45 per cent of the company.

The company called yesterday for shareholders to reject a resolution from rebel stakeholder Denis O’Brien, revoking its board’s powers to issue new equity. The proposal is due to be put to an extraordinary general meeting on November 13th. INM has been in talks with financial institutions to settle a €200 million bond repayment, which has been due since last May.

The company is proposing to give the bondholders a 45 per cent stake in the company to cover part of the debt, and will follow this by a rights issue to shareholders. Mr O’Brien had offered to invest €100 million in the company in return for a majority stake, but the group rejected this.

INM reported yesterday that an ad hoc committee of bondholders, which represents 39 per cent of them, has formally agreed to accept the deal. The group needs the support of 75 per cent of the bondholders for the plan to succeed.

INM’s share price responded to the news by adding 17.5 per cent to close at 23.5 cents in Dublin yesterday, valuing the group at €197.3 million.

The company’s statement pointed out yesterday that the vote on Mr O’Brien’s proposal to revoke the board’s power to issue new shares will have no impact on the restructuring deal, as its terms have already been agreed.

This means that the board can still issue new shares under the terms of the restructuring deal, even if equity holders support Mr O’Brien’s proposal when it is put to them next month.

Shareholders will get to vote on the restructuring deal itself at an extraordinary meeting of the company on November 3rd. The group yesterday called on them to support restructuring and to reject Mr O’Brien’s proposal. It described the deal as fair and reasonable and said it would provide the company with the debt facilities that it needs.

“It is therefore the view of the board that the best prospect for the INM group lies in concentrating all efforts on the timely implementation of the restructuring, thereby providing the group with a more appropriate capital structure and liquidity for the current climate and allowing management to renew its focus on its business and position itself for economic recovery,” it said.

The statement added that while approving Mr O’Brien’s proposal would not invalidate the terms of the restructuring deal, the board did not believe that it was in the best interests of the company and its shareholders as a whole.

Mr O’Brien owns 26 per cent of the company, while its former chief executive, Sir Anthony O’Reilly, controls more than 27 per cent. Mr O’Brien did not comment yesterday.