Business Irish

Monday 15 September 2014

INM reduces pension deficit by €110m

Thomas Molloy Deputy Business Editor

Published 12/09/2013 | 05:00

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INM Chief Executive Vincent Crowley
INM Chief Executive Vincent Crowley

INDEPENDENT News & Media said yesterday that it had reached an agreement with the Pensions Board to cut payments by the defined benefit scheme, an essential step along the path to slashing overall debt at the publisher.

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The company said the agreement would achieve a reduction in the group's scheme by about €110m to about €80m. The reduction in pensions is effective immediately.

The decision by the Pensions Board clears the way for a capital-raising programme of €40m, which is the last major step in INM's plans to cut debt to manageable levels.

Shares in Independent News & Media rose as much as 10pc yesterday morning after the Pensions Board approved the plan. Some 771,109 shares traded hands, 96pc of the daily average over the past three months.

"While the Irish economy does remain difficult, INM is in a very good position to exploit a recovery in the Irish consumer," said Ian Whittaker and Lisa Hau, analysts at Liberum Capital in London, who have a buy rating on the stock. "INM's relative position has strengthened as the downturn has also weakened competitors."

Shareholders will now have to decide whether to subscribe for the new shares or reduce their stake in the company. That share issue is set to take place within weeks.

If successful, it will copper-fasten the efforts of INM chief executive Vincent Crowley (pictured) to cut the company's debts to around €118m or three times earnings before interest, taxes, depreciation and amortisation.

"This restructuring of the pension schemes completes the pension restructuring as outlined in the circular to shareholders dated May 24, 2013, and is a further significant step in the group's balance-sheet restructuring," the company said in a stock-exchange announcement.

"Based on the estimated deficit on the group's defined benefit pension schemes at June 30, 2013, the now-approved proposals would achieve a reduction in the group's pension deficit of approximately €110m."

Yesterday's agreement with the Pensions Board will see staff retirement benefits cut by 39pc for staff with a so-called defined benefit scheme.

INM shareholders agreed at the company's recent shareholder meeting to give 5pc of the company's shares to employees in part compensation for the pension cuts.

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