THE COMMITTEE of bondholders to Independent News & Media (IN&M) has told the company that it backs plans for a third extension of a “standstill” pact with banks and bondholders.
Following a conference call yesterday, the bondholder committee is understood to have indicated to IN&M that it will support a further extension after the current standstill expires next Thursday. IN&M is due to publish interim results the next day and the figures are expected to reflect continued weakness in its main markets.
Although a refinancing formula acceptable to all parties has still not been reached, there were some indications last night of “movement” in the process.
However, the extent to which any of the principals have changed their stance or indicated a willingness to change remains uncertain.
Key IN&M investor Denis O’Brien, for example, has publicly resisted many of the proposals favoured by IN&M and its bondholders and banks. Having said examinership is an option for the company, he has not given any public indication of a change in his bargaining position.
The talks follow IN&M’s failure to repay a €200 million bond last May. Support of a 75 per cent majority of bondholders will be required for the entire bondholder group – which includes Pioneer, Invesco and Aviva – to participate in a new standstill.
IN&M is unlikely to inform the market of a new extension until much closer to the expiry of the current extension. A new extension is likely to run into September, a month in which €50 million of IN&M’s bank debt falls due.
The bank borrowings are categorised as senior debt. This means IN&M’s bondholders would go to the back of the creditors’ queue if there is a default on the bank debt, as the bondholder debt is unsecured. Possibly as a result of that, the bondholder committee’s willingness to participate in a new standstill suggests that the prime bondholders do not want to risk calling in the debt at this point.
IN&M’s annual meeting heard in June that the firm had downgraded its pre-exceptional operating profit forecast for 2009 to between €180 million to €210 million. The downgrade was attributed to weak advertising revenue, down 30 per cent in Ireland and down 20 per cent in Britain, and it assumed “no further deterioration in advertising conditions”.
This forecast was down from the €200 million to €230 million range mooted in April. In June INM said the environment remained extremely challenging given recession in all major economies and big advertising cuts.
