O'Reilly and O'Brien pressed to end divisions
SIR ANTHONY O’Reilly and his long-time rival Denis O’Brien are coming under mounting pressure from Independent News Media’s bankers to cast aside their differences in advance of a looming deadline for repayment of a €200 million bond.
A public rapprochement between the two men is considered increasingly likely as Independent’s bankers seek an end to their bickering as a condition of any new agreement to help the company meet its repayment obligations in May. The institutions in question include AIB and Bank of Ireland, it is understood.
Sir Anthony and Mr O’Brien, who long have been at loggerheads over Independent’s governance and strategic direction, have each lost hundreds of millions of euro as a result of the collapse in its share price, down almost 95 per cent in the past year.
The company’s interests include the Irish Independent, Sunday Independentand the Sunday World. The dominant figure in Independent since the 1970s, Sir Anthony controls 28 per cent of the business. His grip on the firm has come under relentless challenge from Mr O’Brien, who has built up a 25 per cent stake since 2006.
Some close observers believe the ongoing dialogue between Sir Anthony and his rival may yet culminate in Mr O’Brien taking a seat on Independent’s board of directors and in other changes in the organisation. However, the parameters of their talks remain unclear.
To part-fund the bond repayment, Independent is seeking to raise €100 million from the sale of assets such as its 49 per cent stake in online utility price comparison firm Verivox and its 20 per cent stake in online casino software firm Cashcade.
However, the firm is now considered unlikely to have the proceeds of any sales in place before the bond falls due. In the absence of any asset sales in the coming weeks, the company may require bridging finance from banks.
Independent’s bargaining position in its engagement with banks is greatly compromised by the share price collapse, its €1.4 billion debt and by the failure late last year to execute the sale of its 39.1 per cent stake in Sydney-based firm APN News Media.
The company had hoped to cut its debt to less than €600 million by selling its APN shares but no buyer emerged. Although the company is widely held to be seeking to offload the London Independent daily and Sunday titles, their ongoing losses mean it will be difficult to achieve a big price.
While Independent has engaged Merrill Lynch and Davy to raise a private subordinated bond to meet the maturity of the 5.75 per cent senior bond due in May, the credit crunch and the company’s high level of debt suggest it would have to pay a considerably higher coupon than that to successfully refinance the bond.
With financiers arguing that the protracted antagonism between the Sir Anthony and Mr O’Brien has damaged Independent at a very vulnerable time, expectation intensified in recent days that they will soon pledge to work together in the wider interests of the business.
Mr O’Brien’s visit late last year to Independent’s printing press in west Dublin in the company of Gavin O’Reilly, son of Sir Anthony and chief operations officer in the business, was widely interpreted as a signal to its banks of a willingness to compromise. Citing Independent board minutes, the Wall Street Journal reported last month that the firm was hoping to make peace with Mr O’Brien.
An ardent critic of Sir Anthony, Mr O’Brien called on him to retire as chief executive and relentlessly criticised the company. Independent has rejected each of Mr O’Brien’s attacks.