Doubt over INM future
Newspaper giant Independent News and Media (INM) warned today of “significant doubt” over whether the entire company can continue as a going concern.
INM, which owns more than 200 newspaper and magazine titles across the world including the Irish Independent, said it cannot pay a €200m bond which is due to mature on May 18.
The group said that while it still remained profitable it was now in danger of breaching the covenants on its borrowing facilities.
It is now in the midst of urgent talks with the investors that hold the bonds, to try and negotiate a stay of execution on the payment.
In the firm’s annual report, it says that while the board of directors “remain confident of a satisfactory outcome, they have concluded that as the combination and timing of these circumstances is not entirely within their control, they indicate the existence of a material uncertainty which may cast significant doubt on the group’s and company’s ability to continue as a going concern.”
INM titles have suffered, along with the rest of the media industry, as advertising revenues plummet in the economic downturn.
The group said current trading is “tougher than expected”, but added that it still expected operating profits before exceptional items to be within a range of €200m and €230m.
This will be the last annual report with media tycoon Anthony O’Reilly at the helm.
O'Reilly will step down on his 73rd birthday in May and will be succeeded by his son Gavin.
The former Ireland and British and Irish Lions international rugby star has said he will support the company in retirement and is the firm’s largest shareholder.
It has been reported that he might put up some of his own money, along with INM’s other biggest investor Denis O’Brien, to help ease bondholders’ fears.
The pair had been seen as arch-rivals but an agreement to give telecoms mogul Mr O’Brien control of three seats on INM’s board appears to have warmed relations. They are thought to be mulling a €30m cash injection.
INM swung to a pre-tax loss of €161.4m in the 12 months to December 31, a deterioration of 165% on the previous year.
But this includes exceptional costs of €373.1m relating to non-cash impairment charges linked to the economic downturn.
The group said it had entered into “constructive discussions” with an ad-hoc committee of the bondholders, its banks and two major shareholders as it looks to reschedule maturities on the bonds and its bank debt.
It said it was also looking to agree new financing covenants and the provision of sufficient working capital facilities.
INM said the group has shown a “willingness to seek agreement”.
Despite uncertainties caused by the economic downturn and its difficulties raising debt, it expected the group would have “adequate resources to continue in operational existence for the foreseeable future”.
Shares were down more than 20% in Dublin in early trading, but recovered as the morning progressed.