IN&M creditors agree to extension on €200m debt

INDEPENDENT NEWS & Media (IN&M) has agreed a four-week extension with creditors owed €200 million on foot of bonds originally due for repayment last month.

The publisher of the Irish and London Independentnewspapers has been in talks with banks and other financial institutions who hold the bonds, which were due to be repaid on May 18th. Yesterday was the original deadline for the end of the "standstill" agreement under which the talks were held.

The company issued a statement yesterday saying that the period had been extended.

“The financial standstill period will now run until July 24th 2009, or any other earlier date of termination under the standstill agreement or later date if agreed to by the required partners,” it said.

“Arrangements are also in place to provide the group with sufficient funding to meet its working capital requirements during this new standstill period.”

When the original standstill period began on May 18th, the company agreed a €15 million facility to meet working capital requirements. It is understood that it did not draw down any of this money and that the facility is still in place.

The company said yesterday that the extension would allow discussions to continue between the key parties in relation to the group’s financial restructuring.

This week, it emerged that INM is considering raising €60 million from shareholders in a discounted rights issue.

This would require its biggest shareholders, Sir Anthony O’Reilly and businessman Denis O’Brien, to provide a total of over €30 million between them, if they were to take up their rights.

It is also proposing to give bondholders 10 per cent of the proceeds of a sale of businesses, valued at a total of €150 million.

The businesses that the group is considering selling are its South African advertising operation, INM Outdoor, price comparison firm Verivox, and its 20 per cent stake in gaming software developer, Cashcade.

In addition, it wants the repayment date of its remaining debts extended by three years, but is willing to pay more interest than the 5.75 per cent due on these instruments. INM owes another €590 million, due later this year and next, with further bonds due for maturity – repayment – in 2012.

However, Mr O’Brien, who owns 26 per cent of the company, this week criticised these proposals as a “band-aid solution where major surgery is required”.

He is arguing that the company should repay the bonds at a lower rate, and its debts to be extended by five years rather than three.

Mr O’Brien is also recommending that all the proceeds of asset sales be used to pay down its debts. He does not have a seat on the board, but three of his associates, Lesley Buckley, Lucy Gaffney and Paul Connolly were elected to it at the group’s agm in Dublin earlier this month.

Earlier this week, the company issued a statement where it said that the talks’ outcome remained uncertain, but added that there “was a willingness on the part of the stakeholders to reach a consensual solution”.

After its agm, recently-appointed chief executive, Gavin O’Reilly said that all parties were working in a constructive way to resolve the issue.