INM gets approval for sale of South African arm
INDEPENDENT News & Media's (INM) plans to sell its South African business will go through next month after regulators there formally cleared the deal.
INM agreed with philanthropist and businessman Iqbal Surve's Sekunjalo Independent Media consortium to sell its Independent News & Media South Africa (INMSA) unit for just under 2bn rand last February, which will cut debt by €170m.
That deal was formally ratified by INM shareholders in June but South Africa competition authorities had to officially sign off on the sale. Now that hurdle has been cleared, the sale is expected to close on August 15.
The sale is part of a bigger plan to slash INM's debts.
In a statement yesterday, the publisher of this newspaper confirmed that "as previously outlined, all of the consideration received for the disposal of INMSA net of transaction expenses will be applied to debt reduction".
INM shares fell 7.7pc in Dublin to 6c, but have doubled in value this year, making them the best performing stock on the Irish market in percentage terms.
The sale will "thereby secure completion of INM's first stage debt restructuring", the company added.
Overall, the disposal will cut INM's debt to €319m.
Analysts welcomed the move. Davy Stockbrokers' Simon McGrotty said the deal was the "final hurdle in this stage of the disposal process and completes the first stage debt restructuring as previously outlined to the market".
"The second stage of the restructuring will see the group implement a restructuring of its defined benefit pension scheme. The deficit in the scheme at end-December was €162m. After completion of stage two, the group will aim to raise at least €40m in equity and implement a €10m debt equity swap," he said.
"On completion of all these stages to the satisfaction of the lenders, it has agreed to write off €150m of the group's remaining debt, which at the end of 2013 should result in target net debt for INM of €118m," Mr McGrotty added.