Dublin: Independent News & Media’s long-awaited restructuring deal received a tepid welcome from investors on Tuesday, amid uncertainty over whether the agreement will go through to secure the group’s future.
The heavily-indebted publishing empire agreed late on Monday to give bondholders a 47% stake, roughly halving the interests of existing equity shareholders, in order to resolve payment on a long overdue senior note.
But the deal, which includes a €94 million ($137 million) rights issue amd the disposal of its South African advertising business as well as the debt-for-equity swap, still needs approval and key shareholder Denis O’Brien has yet to comment on it.
“It’s still quite uncertain whether this restructuring plan is going to go through in its current form,” said one Dublin-based dealer.
The debt-for-equity swap needs the approval of bondholders representing three quarters of the bonds. So far approval has been given by 39%.
Long running battle
Shares in the group, which owns radio stations and newspapers across Australia, Britain, Ireland, Asia and South Africa, were down nearly 13% at around 24 euro cents in morning trade, underperforming a general market up around 0.5%.
O’Brien, the telecoms billionaire and 26% shareholder in Independent News who has been locked in a long-running battle with the company’s biggest shareholder Anthony O’Reilly over the future of the company, tabled an alternative restructuring plan last week.
That plan, which involved O’Brien gaining a two-thirds stake in Independent in return for a €100 million investment at a price of €0.0142 a share, was rejected by a committee of bondholders.
Representatives of O’Reilly, who stepped down as chief executive earlier this year under pressure from his arch-rival and the weak financial state of the company, also said the former rugby international would not accept O’Brien’s proposal.
O’Reilly had dominated Independent since the early 1970s when he transformed it from an Irish-focused publisher into a global player before its debt-fuelled expansion strategy and bottom line fell foul of the global financial crisis.
The restructuring deal would see O’Reilly’s 28% stake roughly halved if he participated in the rights issue at 5 cents a share, an 80% discount to the current price.