FRESH HOSTILITIES between the main investors in Independent News Media (INM) burst into the open yesterday as Denis O’Brien called an egm at which he will ask shareholders to block a crucial part of the restructuring plan being put in place by Gavin O’Reilly, the chief executive.
Days after INM publicly defied Mr O’Brien by proceeding with plans to sell INM Outdoor, a South African advertising business, he declared he was convening an egm to block the sale and present seven other proposals to shareholders.
INM, whose shares lost almost 4 per cent on the news, said it was difficult to see how Mr O’Brien’s actions assist the resolution of a financial restructuring that it believes to be in the best interests of INM and its stakeholders.
Following years of bitter relations between former chief executive Sir Anthony O’Reilly and Mr O’Brien, stock market observers believe the outcome of the latest confrontation will determine who ultimately gains control of the business. The company has been trying to renegotiate the terms of more than €1.3 billion in debt since it defaulted on a €200 million bond repayment in May. The INM Outdoor sale, from which it would realise €98 million, is the most important asset disposal in its restructuring plan.
INM insiders fear Mr O’Brien’s move would prompt an examinership of the business if any creditors took fright at discord around its board table following the third extension last week of a “standstill” pact with its banks and bondholders.
“It is noted that Mr O’Brien has unilaterally chosen to issue a statement this morning in advance of formal consideration of his request by the board of INM, which, as he has already been advised, has already been convened,” the company said.
“While the company is fully aware of Mr O’Brien’s personal views on a number of matters. . . it notes that a number of the resolutions proposed by Mr O’Brien for consideration are at variance with decisions previously taken by the board of INM.”
Among other demands, Mr O’Brien wants the removal of company chairman Brian Hillery and the replacement of Baroness Jay as senior independent director. This met with a frosty response from INM, which said the appointments of Dr Hillery and Baroness Jay were previously unanimously approved by its board. Mr O’Brien also wants INM to close or sell the loss-making London Independent daily and Sunday newspapers, actions that INM says would lead to big upfront costs.
INM is understood to argue that closure of the titles would lead to a charge of £30 million (€34.22 million) arising from the cancellation of office-sharing arrangements with Daily Mail General Trust and printing arrangements with Trinity Mirror. The “cash cost” to the expected break-even point in two years is much lower, it says.
The egm will have to take place within two months, with 21 days notice a legal requirement.
INM disputes that Sir Anthony, who retired last March, stands under contract to receive a €300,000 annual payment in respect of his position as president emeritus of the firm, which Mr O’Brien says should cease.
Having questioned Sir Anthony’s expenses when building his 26 per cent stake in INM, Mr O’Brien wants shareholders to call for a “detailed schedule” of all board member expenses since the start of 2000 of both executive and non-executive directors. In some quarters, this demand is seen as an effort to publicise the high cost of running the former “international advisory board” at INM. Its members included actor Seán Connery, US journalist Ben Bradlee and other international figures.
“Such matters have already been subject to independent inspection by the group’s external auditors, as per successive annual reports,” INM said in a statement.
Mr O’Brien wants INM to cease to purchase services in the annual amount of €100,000 from Cansult Communications, a company owned by INM non-executive director and former Canadian prime minister Brian Mulroney.
