BUSINESSMAN DENIS O’Brien is believed to have made a revised proposal to the bondholders of Independent News Media (INM) on Wednesday in the hope of finding an alternative solution to the one proposed by chief executive Gavin O’Reilly, which would result in existing shareholders being significantly diluted.
Mr O’Brien has also hired investment bank Credit Suisse to advise him in relation to INM.
It is not clear what revised plan Mr O’Brien offered to bondholders, although it is understood to include an improved package for bondholders while not going so far as to meet the entirety of their €213 million liability.
One source said the latest approach, which would give Mr O’Brien majority control of the media group, included a proposal to sell INM Outdoor, the South African advertising business that has been the centre of a bitter dispute between Mr O’Brien and the O’Reilly family in recent weeks.
This could not be confirmed with Mr O’Brien or his spokespeople. To date, Mr O’Brien has been implacably opposed to the sale of the South African business.
Mr O’Reilly this week won board support for his plan to settle an overdue €200 million bond in full, after the group’s directors rejected an alternative plan from Mr O’Brien.
At a speaking engagement in Dublin yesterday, Mr O’Brien said the restructuring plan announced by the board of INM would make it a “zombie” company. Speaking to a group of UCD students at the Belfield campus, Mr O’Brien said INM was “an old-style company that has been run into the ground”.
He added that the bond-for-equity deal that is on the table includes “no new cash” whereas his offer of a €100 million investment would “give the company a cash injection, bring leverage down, and give it a chance to get off the runway”.
Mr O’Brien said that his investment in the company had been a “disaster” but that he hoped to make back the money he had lost in it, through other investments. Mr O’Brien is estimated to have lost up to €500 million on his investment in INM.
Mr O’Brien’s earlier proposal would have seen him take a 67 per cent stake in INM in return for a €100 million investment but his proposal was rejected by the board of INM.
The new approach to bondholders appears to represents a change in strategy by Mr O’Brien, who first approached the company’s banks in relation to his prior proposal.
Both Mr O’Brien, who owns 26.14 per cent of the group, and his long-time rival Sir Anthony O’Reilly, father of the chief executive, will see their interest in INM significantly diluted in the deal.
On Monday, INM announced that it has reached an agreement in principle with the bondholders on a financial restructuring of the business that would reduce its net debt by €350 million. The refinancing includes a debt-for-equity swap with bondholders and a follow-on rights issue. It also involves the €98 million sale of South African advertising company INM Outdoor.
This forms part of a programme of disposals amounting to €150 million. Bondholders will take 46 per cent of INM to meet €123 million of the outstanding principal amount of the bonds.
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