Independent shareholders forced to part with their own cash

Two of Independent News & Media’s biggest shareholders have offered £27 million of their own money in a bid to secure crucial refinancing for the struggling media group.

Sir Anthony O’Reilly and Denis O’Brien have put up their own cash to help renegotiate a €200 million bond before a mid-May deadline.

INM’s advisors hope to convince investors in the heavily indebted company to roll over between 60% and 70% of their investments into a new bond with a higher interest rate.

The rest will be redeemed with O’Reilly and O’Brien’s input and other bank facilities, according to reports.

It is understood that INM needs to renegotiate the bonds by the time it releases its annual results otherwise auditors will be unable to sign-off the company.

Last week, the group delayed publishing its results for a second time amid further debt talks, which has reached £1.3 billion (see Independent News & Media delays annual results announcement).

Investors in the Irish company, which owns both the Independent and Independent on Sunday, have seen shares in the company lose 90% of their value in the last year.

Dealing with the bond is thought to be the first crucial step in the INM’s debt restructuring process and will give the new board time to find buyers for some of the company’s non-core assets, which could include the two Independent titles.

Corporate finance group Lazard has reportedly been looking for potential buyers of the loss-making UK titles, although it does not yet have a full mandate to explore a sale.

However, the sale process could be formally launched when INM issues its 2008 results this Thursday – which are due to show revenues down by 3% at €1.4 billion, with operating profits of about €270 million.

A number of prelimary offers are already thought to have been received for the Indy titles, though potential bidders still remain unnamed.

Daily Mail & General Trust, which is already set to share its London offices with the Independent‘s staff, has been mooted as a possible buyer.

INM is also expected to sell its South African outdoor advertising business, the German price comparison website Verivox, and gaming software company Cashcade.

There has been speculation that INM is considering selling its 21% stake in Indian publisher Jagran Prakashan as well, which it bought for £22.5 million in 2004.

O’Brien told the Irish press last week that the chances of a successful conclusion to talks over renegotiating the bond due in May were “50-50”.

In the latest ABC release, the Independent suffered the largest decline in the Quality Daily market, shedding over 41,000 from its circulation year on year, leaving it with a total of around 205,000 copies (see ABC National Newspaper Round-Up: March 2009).

The Independent on Sunday was also hit hard in March, falling by 24.3% – or almost 54,000 copies – to leave its total circulation at around 168,000.