INM in final discussions on 'standstill' pact over repayment of €200m bond

INDEPENDENT NEWS & Media (INM) enters final discussions this morning on the parameters of a “standstill” pact with bondholders that would give the company a six-week deadline by which it must reorganise its debt.

Unable to repay or refinance a €200 million note that matures today, INM is expected to inform the stock exchange about the outcome of its talks with holders of the bond. Pending clarification of some outstanding terms early today, a notification is likely around mid-morning.

Although discussions have been difficult and were said at one point in recent weeks to have reached stalemate, a majority of bondholders are known to have signalled support for an extension.

Expectation intensified over the weekend that the entire bondholder group – among them Pioneer, Invesco and Aviva – will sign up today to a deal under which INM would be given a reprieve until June 26th to reorganise its debt. In addition to the €200 million bond now due, INM owes a further €590 million due later this year and next year. Another €591 million is due in three years.

Any standstill pact would provide newly-installed chief executive Gavin O’Reilly with a period of grace under which he would step up efforts to deleverage INM’s balance sheet and sell off assets. Non-executive director Paul Connolly, who represents the interests of key investor Denis O’Brien, has been closely involved in the discussions with bondholders.

On the market are South African advertising business INM Outdoor, wholly owned by the company, and its investments in price comparison firm Verivox and gaming software firm Cashcade. INM hopes to raise between €100 million and €150 million from these sales, but not before the third quarter of the year. It had hoped to avoid uncertainty over today’s deadline by selling off a 39 per cent stake in Sydney publisher APN News Media, but prospective buyers were unable to raise finance for a transaction on terms agreeable to the Irish company.

Pressure from INM’s bankers and bondholders led the company’s main shareholders – Sir Anthony O’Reilly and Mr O’Brien – to set aside their rivalry in March in a deal in which they agreed to work together in the company’s best interests.

Although Mr O’Brien has said there was but a 50-50 chance of an agreement with the bondholders, INM’s directors later said a deal could be brokered. However, the directors warned of a “strong likelihood” that the firm would breach banking covenants “if an amendment or waiver is not granted by the lenders in advance”.