INDEPENDENT NEWS Media (INM) chief Gavin O’Reilly has poured cold water over claims by key investor Denis O’Brien that an examinership of the business is an option as it seeks to restructure its debt after defaulting on a €200 million bond payment.
The public divergence of opinion came as acute advertising weakness led INM to report an operating loss of €13.6 million in the six months to June, while the company defied Mr O’Brien to proceed with the sale of its South African business INM Outdoor.
Amid tentative indications that the company’s banks have agreed in principle to extend the maturity of more than €1.1 billion of its debt, INM is renewing efforts to reach a deal with shareholders following the third extension of a “standstill” agreement with them
Stating to reporters in Dublin that the dialogue with bondholders was very constructive, Mr O’Reilly said an examinership or any other court process would not be in the interests of the company or its stakeholders.
His remarks stand in public contrast to the stance of Mr O’Brien, who said last month that the company will have to consider an examinership process as it seeks to resolve its debt issues.
While Mr O’Brien has vowed to block any sale of INM Outdoor, Mr O’Reilly also expressed confidence yesterday that the decision to sell INM Outdoor for 1.1 billion rand (€98 million) to a private-equity group led by Helios Investment Partners will be approved by a majority of INM’s shareholders.
Mr O’Brien owns 26 per cent of INM and has three representatives on its board, but the transaction requires approval at an extraordinary general meeting from only a simple majority of shareholders. A spokesman for Mr O’Brien declined to say which way he will vote.
Mr O’Reilly said INM’s board had made a determination to proceed with the sale but declined to say if the decision was unanimous.
Under pressure from INM’s banks, Mr O’Brien and former INM chief Sir Anthony O’Reilly set aside their entrenched rivalry last March and agreed to work together in the best interests of the company.
However, public differences between the two camps surfaced earlier in the summer when Mr O’Brien publicly declared his opposition to proposals from INM management to resolve the bond default and restructure its bank debt.
Mr O’Reilly said no one had a veto in relation to how a consensual and constructive deal could be arrived at when asked about perceptions in the market that Mr O’Brien and INM management were no longer on the same page.
He said he did wish to comment on the views of any one particular stakeholder when asked about Mr O’Brien’s view that examinership was an option for the business.
He then said that an examinership was “certainly a million miles away” from the focus of INM’s board and management.
“Certainly from the company’s perspective, we are working towards a consensual deal with all stakeholders,” he said.
INM shares, down 81 per cent in 12 months, finished 7 per cent weaker at 26.7 cent last night after the company reported a 22 per cent drop in revenue to €608.8 million. Operating profit before one-off items – including a €69.9 million writedown on the value of its UK mastheads – dropped 52.4 per cent to €73.2 million. There was a pretax loss of €34.7 million after exceptionals.
Revenues in Ireland dropped 18.6 per cent to €162.3 million and operating profit before exceptionals dropped 56.2 per cent to €20.6 million.
“It’s looking like we’re reaching the bottom but I’m not forecasting any green shoots,” said Mr O’Reilly of the advertising market.
