O’Reilly’s INM stake diluted to 7 per cent, as group signals job cuts
Redundancies ‘inevitable’ says media group’s chief executive
Dermot Desmond has overtaken Sir Anthony O’Reilly and family as the second largest shareholder of INM, behind Denis O’Brien. Photograph: Cyril Byrne
Independent News & Media (INM) moved closer to the completion of its financial restructuring yesterday after shareholders approved its €43 million capital-raising plan. But the company signalled that further cost-cutting, including redundancies, will take place in the new year.
The approval of the capital-raising scheme, described by INM chief executive Vincent Crowley as “a key step” to ensuring the group’s future, means Dermot Desmond will overtake Sir Anthony O’Reilly and family as the second largest shareholder of INM, behind Denis O’Brien.
The company, which placed 86 per cent of the shares in its open offer arrangement, is set to issue 614 million new shares at a price of seven cent tomorrow. In addition, some 69 million shares will be issued to its employee benefit trust, which will give it a 5 per cent holding, in accordance with the terms of its pension deal. Next Monday, a further 152.5 million shares will be issued to INM’s lenders, under the requirements of its refinancing deal. This will give the group’s lenders an 11 per cent stake.
Mr O’Brien and Mr Desmond have committed to buying shares in the capital raise to the tune of an aggregate €29.6 million, with their participation in the exercise constructed so that Mr Desmond’s interest will increase from 6.4 per cent to 15 per cent, while Mr O’Brien’s will remain at 29.9 per cent.
The capital-raising plan consisted of two elements: a firm placing of 431 million shares, which was open to Mr O’Brien, Mr Desmond and certain institutional investors, and an open offer of 183 million shares, to which other shareholders were then given an opportunity to subscribe on the basis of one new ordinary share for every three existing ordinary shares.
Sir Anthony O’Reilly and his family, who have a 13.3 per cent interest in the media group, are understood to have participated in the open offer. This means O’Reilly’s share will now be diluted to about 7 per cent. If he had chosen not to participate, his share would have fallen to about 5 per cent.
Mr Crowley said he did not believe it was unfair that all shareholders had not received the same opportunity to participate in the firm placing element of the capital raise.
“I wouldn’t say it was an unfair situation. It was just a necessary step to make sure we achieved this capital raise, which I think was in the interests of all shareholders, because if we didn’t achieve this capital raise, the banks would have owned 70 per cent of us.”
Mr Crowley said the company’s level of debt was now “very sustainable”. However, the company will embark on a fresh round of cost-cutting in 2014.
“We are looking again at costs,” Mr Crowley said. The savings will come from a mixture of redundancies and productivity gains, he said. “I think, in any cost cuts, inevitably there are some headcount reductions that will arise.”