INDEPENDENT NEWS & Medias (IN&M) chances of resolving a crucial bond issue before its June deadline are less than 50-50, the group’s second-largest shareholder, Denis O’Brien, said yesterday.
The Irish media company, which has built up a debt pile of €1.4 billion, won a grace period from lenders on a €200 million bond earlier this month that gives it until June 26th to hammer out a repayment deal on the senior note.
“We could lose the support of the eight banks because of the delaying tactics of the bond holders,” Mr O’Brien told reporters after addressing an event hosted by the Dublin office of international law firm, Maples and Calder.
“I’ve said to my directors ‘call a halt to this’ and give them an ultimatum and see who blinks. It won’t be us. If they think Denis O’Brien is going to write a cheque to the bondholders, then they are smoking dope.”
Independent News Media had been negotiating for months to try to secure an extension on a May 18th deadline, and all interest and principal payments on the note have been suspended during a standstill period.
The bondholders “don’t have a great hand,” Mr O’Brien said, after a conference.
“We’re still there, but we won’t be there forever. Bondholders should be sitting there counting their lucky stars that we’re there in this climate,”he said.
“They should take the deal on the table and not force the situation.”
Mr O’Brien declined to say what the consequences of failing to agree with the bondholders might be.
IN&M expects to raise €100 – €150 million from the sale of its price comparison website Verivox, gaming software firm Cashcade and its South African outdoor advertising business by the end of the third quarter.
There has been much media speculation that the group wants to sell its flagship London Independent newspaper, but Mr O’Brien said that he wanted to see it survive, once it made a profit.
“I would love to see the London Independent newspaper survive. I think it has a great heritage, it’s got fantastic journalists but they have never made a profit,” he said.
Mr O’Brien had previously advocated the sale of the loss-making title, but he said that he had a “very clear-headed” idea of its future.
Mr O’Brien said that, with the newspaper industry hit hard by a collapse in advertising, its outlets had to provide value for shareholders.
“I don’t believe in having media outlets just for the benefit of journalists and great writers,” he said.
“It [media outlets in general] have to be profitable for shareholders.”
Addressing the same conference, Jon Moulton, managing partner of venture capital fund Alchemy Partners, said that there were “better odds” that the UK would need assistance from the International Monetary Fund than Ireland.
Mr Moulton added that people who are optimistic on the economy are “deluded”.
“There are good things out there but the vast majority are bad,” he said.
“Most optimists are deluded. You would be amazed how bad it is out there.” Mr Moulton said that recovery was more likely to be in 2011 than next year. – (Reuters / Bloomberg)
