Independent News & Media (INM) is to use all the proceeds from the sale of its newspaper publishing business in South Africa to repay part of its €400 million-plus debt.
The company has agreed the sale of INM SA, which owns 18 newspaper titles, to the Sekunjalo Independent Media consortium for appromxiately €170 million.
The company yesterday said it had entered into a binding agreement with Sekunjalo in respect of the disposal of INM SA for two billion rand.
With the exception of €10 million which will be kept in an escrow account in respect of any warranty claims, the remaining proceeds will go towards paying off the group's indebtedness
INM chief executive Vincent Crowley said the sale of INM SA was a key step in reducing debt and strengthening the company's balance sheet.
“The reduction in debt which the disposal will enable is an essential component to the delivery of an overall sustainable and appropriate capital structure for the group.
“INM remains in constructive discussions with our banks in relation to the planned refinancing and will provide a further update in due course," he said.
He said the sale would mark the end of a long association with a company and a management team, led by Tony Howard, which has been mutually beneficial.
When the sale process kicked off in April last year, it had been hoped the disposal of INM SA, the largest English language newspaper publisher in South Africa, would achieve between €275 million and €325 million.
The valuations were important because of the knock-on effect that the sum achieved from the South Africa sale has on the group's negotiations with its banks and its ability to finance further redundancies and to provide some capital for the ailing pension scheme.
Staff were told last year that a redunancies programme would be funded by the sale of the South African business.
The group’s Republic of Ireland defined-benefit pension schemes had a deficit at June 30th of €156.5 million and satff have been wanred that benefits could be halved..
The disposal is subject to INM bank consent, South African Competition Commission clearance and, and the approval of INM's shareholders.
