Holders of bonds reject O'Brien's INM plan

INDEPENDENT NEWS & Media’s (INM) bondholders are believed to have unanimously rejected an alternative proposal to refinance the media company tabled on Wednesday by rebel shareholder Denis O’Brien.

It is understood that the bondholders have informed Mr O’Brien and INM’s banks of their decision and they are now likely to proceed with a deal agreed this week with the company’s chief executive, Gavin O’Reilly.

Mr O’Brien’s revised approach involved selling INM Outdoor, the company’s South African advertising business.

Mr O’Brien, who owns 26.14 per cent of INM, had previously rejected a similar proposal by the board of INM, which is planning to offload the South African arm for €98 million as part of its refinancing plan.

The telecoms entrepreneur proposed a €100 million investment in INM, of which he would have funded 65 per cent directly.

The other €35 million would have been paid by existing shareholders, including Mr O’Brien.

It is understood that under Mr O’Brien’s plan, he would have ended up with a holding of 51.3 per cent in INM.

A source close to one bondholder said they regarded Mr O’Brien’s latest approach as “inadequate in the extreme”. The source said there was “some frustration” that Mr O’Brien’s proposals have only emerged at the end of a six-month negotiation to refinance a €200 bond that fell due earlier this year. The bondholders are believed to be happy that the deal placed on the table by Mr O’Reilly and the board of INM meets their entire liability.

On Monday, INM announced it had reached agreement in principle with bondholders on a deal that would reduce the group’s net debt by €350 million. This would leave bondholders with 46 per cent of the company’s equity.

It is understood that Mr O’Brien’s latest approach placed a value of just 1.4 cent on each INM share compared with 17 cents under the terms of the company’s restructuring plan.

No comment was available from Mr O’Brien last night but in Galway earlier in the day, he said the existing INM plan would turn the group into a “zombie publicly quoted company”.