Independent News & Media (INM) sank 13 per cent to €23.5 today after the company said it will give bondholders a 46 percent stake in the company as part of a restructuring of its debts.
The company will swap €123 million of the money owed to bondholders for the stake. The deal follows months of negotiations on a restructuring of its debts.
The company's directors yesterday rejected a refinancing rival plan from rebel investor Denis O’Brien after chief Gavin O’Reilly secured board backing for his plan to settle an overdue €200 million bond.
In a statement issued last night, INM said the refinancing deal agreed in principle with bondholders and banks would deliver on the objective of achieving a solution that was “capable of implementation outside of a court-administered process”.
The refinancing package includes a debt-for-equity swap with bondholders and a follow-on rights issue. “This restructuring will provide the INM group with a €350 million reduction in net debt in 2009 (through the combination of the equitisation of the bonds, the rights issue and the group’s previously-announced disposal programme) and a stabilised financial position,” said Mr O’Reilly.
Bondholders will take 46 per cent of INM to meet €123 million of the outstanding principal amount of the bonds. The balance of the bondholders’ €213 million claim, including some €15 million in accrued interest, will be applied to underwrite a rights issue.
INM’s existing shareholders will be offered an opportunity to participate in the deal by means of a rights issue of up to €94 million at a price of 5 cent per share, representing a deep discount on last night’s 27 cent closing price.
Mr O’Brien’s plan would have seen him take a 67 per cent stake in INM in return for a €100 million investment, but INM said his approach raised “significant competition law and media plurality issues” linked to an assumption of control by him of Ireland’s largest media group.
Both Mr O’Brien and his long-time rival Sir Anthony O’Reilly, father of the chief executive, will see their interest in INM significantly diluted in the deal.
Additional reporting Bloomberg