One of the 10 biggest shareholders in Independent News & Media (INM) has urged the company to examine using some of its €90 million cash pile to buy back Denis O’Brien’s 30 per cent stake in the company.
The investment firm wants the company to draw a line under the legal issues dragging on the stock, which at 8 cents per share is down 13 per cent this month.
Sources said the investor has asked that INM’s board, chaired by Murdoch MacLennan, seek talks with Mr O’Brien. Alternatively, it has suggested INM could facilitate talks with a third party that might want to buy his stake. It is understood the board listened to the proposal but did not adopt a position.
There are no indications that Mr O’Brien, who spent €500 million building up his stake, would be a willing seller. His stake is currently worth just €33 million.
The investment firm is among several shareholders that wrote to INM in recent weeks to express alarm at allegations by the Director of Corporate Enforcement, Ian Drennan, who wants High Court inspectors appointed to investigate "potentially unlawful conduct" at INM.
Mr Drennan made a series of claims in an affidavit, including that a company controlled by Mr O’Brien paid the bill for an IT firm to access the company’s computer network without the board’s knowledge.
INM's former chairman Leslie Buckley, a long-time associate of Mr O'Brien's, facilitated the "interrogation" of the data, Mr Drennan alleges.
The affidavit also includes allegations that Mr Buckley pressured company executives to pay a “crazy” price for Newstalk, a radio station owned by Mr O’Brien. Mr Buckley has said he will defend himself against all allegations.
INM shares are down 40 per cent in the past year as INM issued two profit warnings in 2017, partly due to spiralling legal costs relating to governance reviews.
INM’s current stock-market value of €110.9 million means investors essentially value the business at less than €20 million, plus its cash pile.
The notion of using INM’s cash to buy back Mr O’Brien’s shares would not be straightforward. Mr O’Brien, whose spokesman did not respond to a request for comment, could decline to sell.
The company would also have to make any share buyback offer available to other shareholders under stock-market rules.
Market sources said it would also be difficult to entice a third party to buy Mr O’Brien’s stake while its current legal issues remained unresolved.
Meanwhile, Mr MacLennan noted in INM’s annual report released on Thursday that it may incur “material costs” due to Mr Drennan’s application. INM wants a judicial review to halt his bid for inspectors.
“No other Irish board has had to endure such public scrutiny in recent years,” he told shareholders.
INM declined to comment.