A consortium of eight banks, including AIB and Bank of Ireland, will write off one-third of Independent News & Media’s (INM) debt in exchange for an equity stake in the group.
The write-down of €138 million is part of a plan to help the newspaper group to reduce debt and restructure the business as operating profits and newspaper circulation decline.
Independent News & Media, which owns the Irish Independent , the Sunday Independent and the Evening Herald , amassed debts of €422 million in acquiring other media groups.
The scheme should reduce its debt to €118 million by the end of the year, with €8 million in additional credit facilities. In return banks will secure a €10 million stake in the company, worth 11 to 16 per cent of the media group dependent on share price at the time of the deal.
Plans also include paying down debts by using the proceeds of the sale of Independent’s South African business, worth some €167 million, raising €40 million in fresh equity and restructuring its pension scheme.
Independent News & Media chief executive officer Vincent Crowley said: “The restructuring is a very positive development for the company and puts us in a good place to deal with the many challenges for our businesses.”
Denis O’Brien controls the group with a 29.9 per cent stake in the company. Existing shareholders will be given the option to buy more shares in proportion to their existing holdings when the group raises €40 million in new equity.
The media group is in discussions with trustees to secure a deal to reduce the deficit in its defined benefit pension scheme, which stands at €162 million.
Talks will continue and a restructuring proposal is to be submitted to the Irish Pensions Board in June.
However, the banks, including Ulster Bank, KBC Bank, BNP Paribas, Barclays, Lloyds TSB and Australian bank ANZ, could receive up to a 70 per cent equity stake in INM if no agreement is reached on how to restructure the company’s pension scheme.
The plan will help INM improve its finances. Mr Crowley added: “Importantly it achieves our strategic aim of being at three times’ debt to EBITDA, which for a cash -generative media company is a very comfortable level of debt.
“We have predicated these restructuring talks with our banks based on prudent forecasts. We’re not expecting any uptick in the Irish economy for the foreseeable future and basically it’s a story of revenue declines offset by cost cuts.”
