INDEPENDENT NEWS & Media (IN&M) investor Denis O’Brien wants shareholders to vote to block its board from issuing new shares or other securities.
The newspaper and advertising group is in talks with creditors over the repayment of €1.2 billion that it owes on foot of a series of bond issues.
One of the options reported to be on the table is a debt-for-equity deal which would see the group issue new shares to its creditors, thus diluting existing shareholders’ stakes.
The company said yesterday that Mr O’Brien had written to it seeking an extraordinary general meeting of shareholders, his second such request in the last two weeks. IN&M said Mr O’Brien was proposing a resolution to revoke its directors’ authority to issue shares and other securities.
Its added that shareholders approved the directors’ rights to do this at the company’s annual general meeting in June, following a proposal which the board, including Mr O’Brien’s three representatives, unanimously backed.
“Revocation of this existing valid authority, during this difficult and rapidly developing period as the company pursues its restructuring discussions, would undermine the board’s efforts to find an optimal solution for the company, and its shareholders, creditors and other stakeholders,” the statement said.
It added that the company has asked Mr O’Brien to give it details of any restructuring proposal that he wants to put forward, but that he had so far failed to do so. It repeated the invitation yesterday.
Mr O’Brien did not comment yesterday. Sources said he did not believe that the board was displaying any urgency about coming up with its own restructuring proposal.
Earlier this week, he said that the company should not be allowed to dilute shareholder rights without first getting their approval.
Mr O’Brien owns 26 per cent of the group, slightly less than its largest shareholder, his rival Sir Anthony O’Reilly and his family. Both parties would see their stake diluted if creditors agreed to the debt for equity swap suggested by reports earlier this week.
Sir Anthony stepped down as chief executive earlier this year and was succeeded by his son Gavin O’Reilly. At the same time, Mr O’Brien’s allies, Leslie Buckley, Lucy Gaffney and Paul Connolly, joined the IN&M board.
The company has been in talks with its bondholders since May, when it won the first of a series of extensions, known as standstill agreements, on a €200 million repayment due on a tranche of its bonds, while the negotiations are ongoing.
The latest of these extensions runs to September 25th.
In the meantime, the company has agreed the sale of its South African outdoor advertising business for €98 million. Shareholders have to agree to this deal before it goes ahead.
IN&M yesterday agreed a printing deal for its Northern Ireland operation worth £40 million (€45 million).
Under this agreement, it will print the Daily Telegraphand Daily Mirrortitles.
