Decline in INM value not a concern for O'Brien

DENIS O'BRIEN REACTION:Businessman Denis O'Brien says he is not concerned at the dramatic fall in the value of his investment in Independent News & Media (IN&M).

He added that he is a long-term investor in the company and takes a “10-year view” on his stake in the business.

Mr O’Brien has spent about €500 million over the last three years amassing a 26 per cent stake in the company, making him the second-largest shareholder in INM after chief executive, Sir Anthony O’Reilly, who holds a 28 per cent shareholding.

INM’s share price has declined 88 per cent over the past year, reducing the company’s market value to €280 million from €1.8 billion and eroding the value of Mr O’Brien investment.

Speaking to The Irish Timesat the Davos economic forum, he said: "I made an investment, but I am a long-term investor. I invested in Esat in the 1990s when everybody said you are not going to make money out of this. I took a 10-year view on that. I take a 10-year view on nearly everything, so I am fine.

“Look, nobody likes to see an investment that they have made decline in value but it’s not something I would be concerned about.”

Mr O’Brien said he was “totally comfortable” with the company’s decision on Monday to cancel its final dividend. Mr O’Brien received €9.5 million in interim dividends for 2008. INM’s final dividend payout for 2007 was €60.2 million.

“That is the right thing to do. Even privately I have said, ‘cut the dividend – who cares?’ You are better off using that cash and those resources for paying down debt than giving it out to shareholders,” said Mr O’Brien, who owns Digicel, the mobile operator in the Caribbean, Central America and the South Pacific.

“Some private shareholders probably need the capital. Certainly I don’t need it. I would be happier to defer the dividend for the next two, three, four, five years – whatever it takes to restructure the business and re-fix the balance sheet.”

Mr O’Brien said INM should “move like lightning” to reduce its €1.4 billion debt pile and fix the capital structure of the company by raising money to meet the repayment of a €200 million bond this year. “Two or three years ago it didn’t look heavily indebted but now it does because earnings have come down substantially and leverage ratios have moved up, so they need to work on that,” he said.

Mr O’Brien welcomed INM’s statement on Monday, in which the media group said it would eliminate any loss-making businesses, prompting an expectation that the London Independent title would be sold.

“It is unclear what they are planning to do there . . . They are saying anything that is loss-making is not for us and that is a major step,” he said.

The businessman, a regular attendee at Davos, said he expected the European economy to start growing again by early 2011 and for the US economy “to see modest growth” by early 2010.