REBEL INDEPENDENT News & Media (IN&M) shareholder Denis O'Brien kept his counsel yesterday on the company's refinancing deal, his camp declining to comment on the firm's rejection of his own plan to invest €100 milllion in the business.
Down more than 80 per cent in 12 months, shares in the company dropped 3½ cent to 23½ cent on the day after its board backed an outline deal promoted by chief executive Gavin O'Reilly to settle an overdue €200 million bond.
"Since the announcement of the deal, the feedback has been uniformly positive by the bondholders," said a source close to the bondholder group.
The deal, under negotiation since May, requires support from 75 per cent of bondholders to proceed.
Although the composition of the IN&M board is likely to be raised following the refinancing process, this is not seen as an immediate priority for the bondholders, who stand to receive 46 per cent of IN&M in a debt-for-equity swap in part-settlement of their €213 million liability.
The swap would dilute Mr O'Brien's 26 per cent stake in IN&M to 14 per cent even if he takes up his rights in a follow-on discounted rights issue.
His rival Sir Anthony O'Reilly, father of the chief executive, will see his stake drop to some 15 per cent from 28 per cent if he takes his rights.
The rights offer price of five cent per share represents an 81 per cent discount on the company's closing share price on Monday, before the deal was endorsed by the IN&M board.
The company said Mr O'Brien's proposal would have seen him take a 67 per cent stake in the company by investing at 1.42 cent per share, a 95 per cent discount from the closing price on Monday.
Bondholders rejected that proposal, as did Sir Anthony.
The rights issue will be underwritten by bondholders, whose IN&M stake would increase to 76 per cent if none of the shareholders subscribe to their rights.
While close observers of the situation in the company say the refinancing package will not be the final act in the increasingly bitter confrontation between the two men, the options under review in Mr O'Brien's camp are unknown.
He has vowed to block the €98 million disposal of South African advertising business INM Outdoor, a key refinancing transaction on which shareholders will be asked to vote at an extraordinary general meeting (egm). While the debt-for-equity swap does not require shareholder approval, their approval at an egm is required to trigger the rights issue.
In addition, Mr O'Brien will seek at an egm in early November to remove the company's chairman, Dr Brian Hillery, and its senior independent director, Baroness Margaret Jay. Mr O'Brien wanted to seek shareholder approval to close IN&M's London Independent titles but the company refused to put that to a vote.
