RUSSIAN BILLIONAIRE Alexander Lebedev, owner of the Evening Standardin London, has publicly declared his interest in buying the London Independenttitles from Independent News & Media (IN&M).
“It would be interesting and we are inside the picture. But they have certain issues to be resolved,” Mr Lebedev told Media Week in London.
Media Weekquoted a source saying Mr Lebedev met IN&M chief executive Gavin O'Reilly last week to discuss a possible sale, but INM's spokesman said the company was unable to confirm whether such a meeting took place.
Mr Lebedev has been mooted for some time as a possible suitor for the lossmaking titles. His public interest in a deal comes amid tough negotiations between IN&M, key shareholder Denis O’Brien, and banks and bondholders over its failure to repay a €200 million note that fell due in May. These negotiations could delay a deal, Mr Lebedev said.
Last week IN&M secured a second extension to a “standstill” pact in relation to the overdue bond until August 27th. However, the company is coming under mounting pressure to resolve the issue before then as a €50 million bank debt falls due in September.
IN&M has been trying to formulate an overarching deal to restructure its liabilities – between loans and bonds, it owes a total of €1.38 billion in the period to 2012 – but it has so far failed to find a formula acceptable to all sides.
Banks are party to the standstill. However, it is widely acknowledged that IN&M’s position would be weakened further if bank debt went overdue on top of an overdue bond. Thus the end of the current standstill is seen by some participants as an effective deadline.
While the London newspaper titles are unlikely to realise a big price in the midst of recession in Britain, a disposal would eliminate a certain level of operating losses from INM’s business.
IN&M has engaged in asset disposals but Mr O’Brien said last weekend he was opposed to the sale of South African advertising business IN&M Outdoor, a unit that could fetch €100 million. This came as a surprise to some in the firm as IN&M Outdoor was already on the market in March when three of Mr O’Brien’s closest associates joined the IN&M board.
The move was perceived as Mr O’Brien, who owns 26 per cent of IN&M, giving his imprimatur to the asset disposal programme.
However, Mr O’Brien is understood to have changed his mind in the last fortnight when he visited IN&M’s South African operation and concluded that the outdoor advertising unit had “very considerable” growth potential. While he is likely to vote against any disposal of this business, he cannot veto such a deal as it would require the support of only a simple majority of IN&M shares.
The firm’s sale last week of its 18.07 per cent stake in gaming software firm Cashcade to PartyGaming followed the sale of a third of its investment in the expanding Indian publisher, Jagran Prakashan (JPL), for €22 million.
IN&M retains 13.5 per cent of JPL, which has reported a 42 per cent rise to €10.6 million in earnings before interest, tax, depreciation and amortisation in the first quarter of its fiscal year.
