Independent News and Media has reported a 26 per cent fall in pretax profits to €211.7 million for 2008, before exception items.
The media company also confirmed it has been unable to secure new borrowing facilities to fund the maturity of a €200 million bond falling due on May 18th.
“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,” the company said in a statement this morning.
INM said it remains in talks with its bondholders and is seeking a “financial standstill period”. The group has appointed Rothschild and Davy as advisors as it seeks a solution to its refinancing requirements.
However, there is now a “strong likelihood” of a breach of financial covenants within its borrowing facilities during 2009, if an amendment or waiver is not granted by the holders of a bond which the company is seeking to refinance.
A spokesman for Denis O'Brien, Independent News Media’s second-biggest shareholder, said this afternoon the business has “a number of valuable assets, which with focussed management and improving economic circumstances could return value to equity and debt holders alike”.
The statement said “management needs to remain focussed on eliminating loss making businesses and all stakeholders need to work together to ensure that value is protected.”
Published its latest full-year results today after postponing their release twice in recent weeks.
Shares in INM fell almost 12 per cent in early trade in Dublin before recovering to reach 1pm at 24 cent, down 4 per cent. At this level the company has a market value of €201 million and the stock has lost 87 per cent of their value.
Some Dublin-based traders detected brinkmanship in Independent's announcement and remained confident a deal would be sealed ahead of the May 18th maturity date.
"This is a shot across the bow of the bondholders. They are telling them to play ball or else they'll default," said one dealer.
"We are getting towards levels where we would think about dipping the toe in. There is potential upside of 28-30 per cent when a deal gets done."
Earnings came under pressure as the company suffered a loss of €373.1 million on exceptional items including a write down in the value of some of its newspaper assets by €290.9 million due to the economic downturn.
After tax, minority interests and exceptional items the company reported a loss of €164.4 million with earnings per share of 12.6 cent. No final dividend will be paid.
For the year ending December 31st revenues dropped 11.8 per cent to €1.477 billion, or by 2.6 per cent on a constant currency basis.
It said total group costs fell by €138 million by 0.7per cent on a constant currency basis last year and have fallen a further 7.9 per cent so far this year.
Cash generated from ongoing operations was €287.3 million in 2008, a rise of 3 per cent.
Publishing revenues last year fell 5.2 per cent while advertising revenues including online fell 8.5 per cent. Overall online revenues rose 16.3 per cent, the company said.
For the company's Irish operations, where it publishes the Irish Independent, Sunday Independentand Sunday Worldamong other titles, revenues fell 6 per cent to €377.3 million due to a "significant fall-off in advertising in the second half".
Avertising revenues fell 15 per cent last year in Ireland, INM said.
For the first quarter of 2009 trading has been "tougher than expected" but assuming advertising and credit markets do not deteriorate further it expects profits this year in the range of €200 million to €230 million.
Sir Anthony is stepping down as chief executive on his 73rd birthday in May and will be succeeded by his son Gavin O'Reilly.
Additional reporting Reuters
