O’Brien pushes alternative rescue plan for INM
INM’s second biggest shareholder Denis O’Brien has proposed an alternative rescue plan that would see him invest £90 million into the ailing company.
O’Brien held last-minute talks with the group’s syndicate of eight major banks in an attempt to win support for his alternative restructuring plan, which would see bondholders receive some cash immediately and swap the remainder of their loans for equity in the company.
Under O’Brien’s proposals, which could also make the positions of chief executive Gaving O’Reilly and chairman Brian Hillery untenable, there would be no need for a subsequent heavily discounted rights issue.
The rebel shareholder, who is believed to have offered to invest £90 million of his own money into INM, has also called for the company to keep hold of its South African advertising business, which O’Reilly and the current management team have agreed to sell for €98 million.
INM’s current restructuring plan involves using the money from the sale to repay bank debt, however, O’Brien has argued that INM needs to retain its lucrative businesses and instead focus on getting rid of struggling operations such as the loss-making Independent titles.
Earlier this week, O’Brien voiced his opinion about the Independent and its sister title, The Independent on Sunday, saying “there is no point is us as company subsidising a newspaper that really nobody wants to read”. He claims the newspapers will be closed by the end of the year.
However, his rival shareholders, particularly O’Reilly, have made selling INM Outdoor and helping the UK titles back to profitability within the next two years the focus of their strategy for turning the company around.
If INM’s banks decide they prefer O’Brien’s restructuring proposals, the company would face massive changes, which could force the current management team to leave.
O’Brien’s plan, however, does pose potential problems. The shareholder already has a 26% stake in the company and if he were to inject £90 million as part of the rescue plan, his stake would be increased to more than 30%, which is the threshold according to Irish takeover rules – unless he is prepared to make an all-out bid for the company.
His plan would therefore require a waiver of this rule from the Irish regulator, as well as a waiver for INM itself, as it includes a transfer of over 30% of the company.
INM’s banks – Allied Irish Bank, Bank of Ireland, Barclays, BNP Paribas, KBC Bank Ireland, Lloyds TSB and Ulster Bank – are expected to consider O’Brien’s proposals before making a decision.