Independent News & Media is close to a debt-for-equity deal that would end uncertainty over its finances after months of talks with lenders, an industry source said today.
The deal would allow ex-chief executive Anthony O'Reilly to remain the largest shareholder of the publisher whose titles range from the Irish Independentto South Africa's Cape Times, but may still be challenged by Denis O'Brien who wants the loss-making London-based Independentnewspaper sold.
The heavily indebted media group has been trying for months to refinance an overdue €200 million senior bond and the source told Reuters a deal would involve about €100 million to €120 million being swapped for a stake in the company, followed by a rights issue to pay for the rest.
"That (the size of the swap) is going to depend on what the price is that shares are issued at," the source said. "That ultimately will then determine what additionally is needed to be raised."
A spokesman for the group said the company was in "ongoing discussions towards a consensual solution", declining to comment further.
Independent has until September 25th, the latest in a long line of deadlines, to sort out a refinancing deal with bondholders. Even if agreement is reached this week the bond will likely be rolled over again so details can be hammered out.
Shares in IN&M were up nearly 6 per cent by 10am at €0.28, while the wider Irish market was 1 per cent higher.
The rights issue would likely dilute by about half the 28 per cent stake of Mr O'Reilly, as well as his arch-rival Mr O'Brien's 26 per cent holding.
Former bondholders would collectively end up owning around 25 per cent but Mr O'Reilly would remain the single biggest owner.
"What people are saying is that if they get this out of the way, get the bondholders off their backs ... they are madly diluted but how much of that is in the price anyway?" one Dublin-based trader said.
"I suppose it's at least drawing a line in the sand, which is the way some investors are viewing it."
The deal could still run into opposition from Mr O'Brien, who this month ended a truce with management led by Gavin O'Reilly, Anthony's son, calling for a shareholder meeting and proposing to sell flagship London newspaper The Independent.
"At the very least, it does appear that some consensus is emerging ahead of the latest (bond) standstill extension," said analyst Gerry Hennigan at brokerage Goodbody.
"But given past criticism, we would expect opposition from the O'Brien camp."
Reuters