INM reports €161.4m loss
Independent News & Media has failed to reach a deal with bondholders over a €200 million bond and has reported a full-year pre-tax loss of €161.4 million for 2008.
INM had previously warned that its failure to agree a deal over the bond means there is “a material uncertainty which may cast significant doubt on the group’s and company’s ability to continue as a going concern”.
The owner of the Independent titles added that “difficult trading conditions” mean there is a “strong likelihood” that it will breach its banking covenants this year as a result, unless lenders agree a waiver.
INM is still in talks with bondholders, but said there is not enough time to renegotiate its debt before the deadline of May 18.
On Monday, two of INM’s biggest shareholders – Sir Anthony O’Reilly and Denis O’Brien – offered £27 million of their own money in a bid to secure crucial refinancing for the struggling media group (see Independent shareholders forced to part with their own cash).
“There can be no certainty that these discussions with the bondholders, the banks and the two major shareholders will be successfully concluded or that banking facilities will continue to be available to the group on commercially acceptable terms,” INM said this morning.
However, the company is trying to agree a “financial standstill period” with bondholders, which would allow talks to continue beyond the May deadline – “Discussion to date have indicated a willingness for all parties to seek agreement,” INM added.
INM also reported a pre-tax loss of €161.4 million for last year, compared with a €284.8 million profit for 2007.
The Irish firm had postponed releasing its financial results twice in the hope that an agreement with bondholders could be reached beforehand (see Independent News & Media delays annual results announcement).
The company said its 2008 losses were mainly due to a €373.1 million exceptional charge – €290.9 million of which related to INM’s decision to write down the value of its newspaper assets amid the economic downturn.
However, INM failed to announce the sale of any core assets, which include both the Independent and Independent on Sunday newspapers, as expected.
Its UK division, which includes both Independent titles, reported 2008 revenues of €215 million – a €53.1 million decline on 2007.
The company said this was “mainly driven by a reduction in advertising and circulation revenues”- the operating profit at the UK company also fell to €200,000 in 2008.
Meanwhile, the INM’s UK Nationals division’s advertising revenue was down 14.3% on 2007, driven by “the very weak economic climate in the UK”.
However, despite its poor results and warnings about debt obligations, INM directors insist that they “have a reasonable expectation that the group and company has and will have adequate resources to continue in operational existence for the foreseeable future”.
INM said today that the first quarter of 2009 has been “tougher than expected” but they expect to post profits of between €200 million and €300 million this year.
There has been speculation over the past few weeks that INM will announce the sale of its UK Indy titles in a bid to alleviate its financial situation – prelimary offers are already thought to have been received.
Daily Mail & General Trust, which is set to share its London offices with the Independent’s staff, has been mooted as a possible buyer.
INM is also expected to announce the sale of its South African outdoor advertising business, the German price comparison website Verivox, the gaming software company Cashcade, and its 21% stake in Indian publisher Jagran Prakashan.
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.