Big shareholders back pounds 23m Newspaper Publishing cash call

Large shareholders in Newspaper Publishing, publisher of the Independent and Independent on Sunday, yesterday backed a pounds 23m rights issue.

Mirror Group, owner of the Daily Mirror and Daily Record, and Dr Tony O'Reilly's Independent Newspapers, have agreed to support a rights issue by the group which will see their stakes increased to 46.4 per cent each and the Spanish group Promotora de Informaciones (Prisa) diluted to 6.7 per cent.

The two main shareholders will see their stakes raised from around 43 per cent each now. Prisa, publishers of La Repubblica, which currently holds just under 9 per cent of Newspaper Publishing, has indicated that it will not take up its rights.

Part of the new equity will replace pounds 14m of existing loans made to Newspaper Publishing by Mirror Group and Independent Newspapers, and the other pounds 9m is new money, to be invested in the group's ongoing businesses.

They are taking up their rights on a one-for-one basis at 31p a share. The rights issue will not be underwritten.

Newspaper Publishing cut its losses to pounds 19.5m in the year to December from pounds 50.8m in the previous 15-month period. Liam Healy, the group's chairman and chief executive of Independent Newspapers, said cost reductions, other than newsprint, and improving revenues had significantly reduced the rate of losses.

"Since the refinancing of the company in May-June 1995, the quality newspaper market in the UK has remained very competitive. However, there has been some relaxation of the aggressive cover pricing policies seen last year which has been accompanied by an improvement in the company's circulation revenues."

Cover price increases in July and January "do not appear to have significantly affected the circulation of the Independent", he said. Year-on-year circulation figures for January remained largely unchanged.