Boost for troubled Johnston Press with bank deal
Published 28/12/2013 | 02:30
TROUBLED publisher Johnston Press has been given a boost after the firm did a deal with its banks to reset its covenants until 2015.
In a statement, the company said it had reset its financial covenants through to the maturity of its debt facilities in September 2015 and intends to pursue a refinancing of these facilities early next year.
The firm, which owns 14 newspapers in Ireland, including the 'Kilkenny People' and 'Leinster Leader', has debts of around £300m (€360m). The debt, which was built up in the boom, now stands at an unwieldy 10 times operating profit.
Earlier this month Johnston said it was in talks to sell its operations in the republic to Mediaforce -- a conglomerate owned by entrepreneur Malcolm Denmark. Around 140 people work for Johnston Press in Ireland.
In the statement, Johnston said: "Its lenders have agreed to reset its financial covenants until September 2015, providing the company with a stable financial platform from which to pursue a full refinancing in 2014. Discussions in relation to the refinancing are expected to commence in the new year."
If Johnston can get a deal on its bank debts before the end of 2014, it could save as much as £25m, or about a quarter of the group's market capitalisation.
Company chief executive Ashley Highfield said he was "pleased" that the deal had been reached. "I am pleased with the ongoing support shown by our lender group in providing a clear path for the continued pursuit of our operational strategy, which has shown very encouraging developments in 2013.
"We plan to refinance the group in 2014 and will continue to work closely with our lenders and their financial advisers for that process. A stable medium-term capital structure will support the acceleration of our digital growth strategy and would expedite the projected return to overall top line growth," he added.
Johnston Press has been pursuing an aggressive restructuring under Mr Highfield in the past 24 months, slashing staff numbers by almost a quarter, cutting circulation for some newspapers, and shuttering others.
Now those efforts were starting to take effect, the company said.
In the six months to the end of June, Johnston posted its first increase in earnings before interest, tax depreciation and amortisation (EBITDA), and added that EBITDA had climbed 7.8pc in the 18 weeks to the end of October.
"The group continues to make significant progress with the implementation of its operational strategy.
"This is focused on growing the overall audience through the re-launch of its print titles and investing in new digital products, returning to top-line growth through the acceleration of digital revenue growth and mitigation of print advertising decline, whilst continuing to control costs," the company added.
Shares rose sharply on the news, with the stock closing up 3.5pc in London. Shares in the business have risen around 15pc in the past year.