IN&M shares fall as reprieve granted on bond

SHARES IN Independent News & Media (IN&M) lost ground in a rising market after the firm won a 40-day reprieve from the holders of a €200 million bond which it was unable to repay or refinance when it fell due yesterday.

IN&M will use the “standstill” period agreed with its banks and bondholders, which may yet be extended, to step up efforts to dispose of assets and extend the maturity of its debts. In addition to the €200 million note, IN&M owes a further €590 million due later this year and next and another €591 million due in 2012.

The firm and its dominant shareholders – former rivals Sir Anthony O’Reilly and Denis O’Brien – are seeking to reach an overarching agreement with all bondholders and banks. The standstill was necessary to facilitate ongoing negotiations between the key stakeholders in relation to its financial restructuring, IN&M said.

IN&M stock, down 86.5 per cent in 12 months, finished more than 11 per cent weaker at 27½ cent last night. The decline was attributed in some quarters to the absence of any update from the company on its asset disposal programme.

Newly installed chief executive Gavin O’Reilly is selling South African advertising business IN&M Outdoor and the company’s interests in price comparison firm Verivox and gaming software firm Cashcade. Close observers of IN&M believe the restructuring process may also lead to the disposal of its loss-making London Independent newspaper titles or its 20.8 per cent stake in Indian publisher Jagran Prakashan.

In an early morning stock market notification of the bondholders’ reprieve, IN&M said it had procured an additional €15 million working capital facility from its banks for the standstill period. This facility is secured on “certain agreed assets” and sums are to be repaid from “specified asset disposals”. However, neither the assets secured nor disposals in question were set out by IN&M.

“The standstill period will commence on Monday 18th May 2009 (being the maturity date of the bonds) and run until 26th June 2009 (or any earlier date of termination under the standstill agreement),” the company said.

“The standstill period may be extended beyond 26th June, but only with the consent of INM’s bondholders and banks who are party to the standstill agreement.

“Implementation of the standstill required agreement from all of IN&M’s principal bank lenders and in excess of 75 per cent of IN&M’s bondholders by value, with 91.16 per cent of the bondholders by value now agreed.”