Independent News & Media warns it’s likely to breach repayment of euro200m bond debt

Independent News & Media warns it can’t pay debt

DUBLIN — Ireland’s major newspaper publisher, Independent News & Media, warned Thursday it is likely to default on a euro200 million ($265 million) debt due for repayment next month and is seeking a possible bailout from its top two shareholders.

The Dublin-based global media and advertising company made its disclosure in its full-year 2008 results, which recorded net losses of euro159.4 million ($212 million) versus a profit of euro195.7 million in 2007.

Sales fell 11.8 percent to euro1.48 billion, reflecting the company’s loss of advertising and circulation revenue in a newspaper empire that extends from Britain to South Africa, Australia and New Zealand. The company did increase its income from its stakes in Indian newspapers and radio stations, online advertising and billboards.

Shares in Independent News initially plunged 20 percent on the Irish Stock Exchange, but recovered to close up 4 percent at euro0.26 amid wider market gains.

Independent News said it could not pay back a euro200 million bond due to mature May 18 because it could not secure new borrowings from international creditors. “The group currently does not have sufficient financial headroom available under its existing facilities in order to meet this maturity and service its debt obligations,” it said.

The company warned of “a strong likelihood of a breach” and appealed to creditors to agree to “an amendment or waiver” that would buy time for a bailout. It said the company was in negotiations with those creditors and Independent News’ two biggest shareholders, Irish billionaires Anthony O’Reilly and Denis O’Brien. Both men own around 25 percent of the company’s battered shares.

O’Reilly — who is stepping down as Independent News’ chief executive May 7 to be succeeded by his son Gavin — has already lost more than euro200 million in his failed fight to defend his other major Irish business, Waterford Wedgwood PLC. That bankrupt company was sold off to U.S. venture capitalists in February.

Telecoms tycoon O’Brien, who recently overtook O’Reilly on the list of Ireland’s richest people, has sunk hundreds of millions of his own wealth into building a pivotal stake in Independent News & Media, Ireland’s dominant newspaper publisher. He has repeatedly clashed with O’Reilly and, as part of a recent boardroom shake-up, has succeeded in appointing three allies to the Independent board.

The annual report of Independent News, also published Thursday, revealed that the departing O’Reilly was paid euro1.5 million last year, down from euro2.2 million in 2007.

The company’s Irish division — which publishes Ireland’s top-circulation tabloid the Sunday World, the highest-circulation broadsheets Independent and Sunday Independent, and 13 regional newspapers — saw sales slide 6 percent to euro373 million.

In the United Kingdom, sales slumped 19.8 percent to euro215 million. That reflected deepening red ink at the company’s London flagship, the Independent, and falling ad revenues at the Belfast Telegraph, the top paper in Northern Ireland.

The company declined to comment Thursday on continuing speculation that it is seeking a buyer for the London newspaper and its sister title, the Independent on Sunday. They have been the company’s poorest-performing assets since Independent News bought them 11 years ago.

The company’s 39.2 percent stake in APN News & Media, which owns more than a dozen newspapers and radio stations in Australia and New Zealand, saw sales fall 12.7 percent to euro671.8 million.

Sales in the South African division, which owns several newspapers and magazines as well as billboard advertising, fell 9.5 percent to euro212.5 million.

The company’s lone bright spot was India, where its 20.8 percent stake in the Jagran Prakashan newspaper group recorded an 11.2 percent gain in sales to euro130.5 million, driven by the success of India’s top-selling newspaper, Dainik Jagran. Independent News said it now published 37 editions in 11 Indian states with a weekly readership of 55.7 million — the biggest newspaper audience in the world.

On the Net:

Results, www.inmplc.com/news/uploads/Preliminary_2008.pdf