Johnston Press ditches Irish sale
Johnston Press is at risk of breaching its banking covenants after it ditched the planned sale of its Irish titles.
In a trading statement issued this morning, the regional publishing group said despite “considerable interest” to buy its titles in the Republic of Ireland, which includes the Leinster Leader series, the board had been unable to secure a “sufficiently high price”.
The company had hoped the sell-off would raise funds and had previously warned that failure to sell its Irish papers would result in a “strong likelihood” of breaching its financial covenants this year.
As a result, Johnston has now entered talks with its debt providers to agree a relaxation of its existing terms, which it said has been “constructive and supportive” so far.
“The board confirms today that the sale process being conducted to dispose of the Republic of Ireland titles has now been terminated,” said the statement.
“While there was considerable interest shown from both trade and financial buyers, the board decided that it was not at a sufficiently high price to be in the company’s best interest.”
The company’s net debt stood at £488 million at the end of April, down £29 million from the start of the year.
Out of this, £13 million was due to the strengthening of sterling against the euro and £16 million was cash generated from operations.
Johnston’s chief executive John Fry described the ad market as “fragile” and said the company’s operating profits for this year are likely to be towards the lower end of current market expectations as cost reductions are “not sufficient to offset the fall in advertising revenues”.
The company also reported a 34% year on year drop in ad revenues for the period starting at the beginning of the year until May 9.
“Whilst our market remains fragile, we have seen some stability in advertising revenue over recent weeks, our cost reduction programme is on track, and we are making good progress in the discussions with our debt providers,” Fry added.
“This gives us encouragement that we will be well placed to benefit from any recovery in the economy as and when it emerges.”
However, Johnston’s share price had plummeted 25%, down 7.75p, to 23.25p in early trading this morning.