Fears grow over Johnston Press as sale talks end

Offers for Irish titles 'not high enough', says regional newspaper group

Johnston Press, the publisher of The Scotsman, is close to breaching its debt covenants after talks to sell its Irish titles collapsed.

The struggling regional newspaper group said yesterday the sale process of the titles "has now been terminated", sending the shares down almost 30 per cent as investors feared the worst. This has added further pressure as just two months ago it raised doubts over its future as a going concern.

Despite receiving serious interest for the Irish publications, the group did not believe any offer came in "at a sufficiently high price to be in the company's best interest". Gareth Davies, an analyst at Investec, called the news "disappointing".

The collapse in negotiations has made the company's attempts to renegotiate its debt with the lending banks to avoid breaching the terms more urgent.

Johnston had said in March that if the Irish business was not sold off, it would likely breach a financial covenant in its debt facilities during 2009.

Discussions to relax the covenants, and renegotiate the facilities beyond September 2010 have been "constructive and supportive", but the parties are yet to agree terms, the group said. It hopes to have agreed refinancing before reporting half-year results in August.

Advertising revenues, which make up about two-thirds of revenue, fell in the 19 weeks to 9 May by 34.4 per cent on the same time the previous year, disappointing market expectations.

The group was more upbeat about ad revenues however, pointing to "greater stability in recent weeks".

In an attempt to offset the fall in revenues, which has also been hit by the rising cost of newsprint, Johnston has increased its cost-cutting drive and hopes to slash £30m more this year than in 2008. "Whilst these cost savings are encouraging, they will be not be sufficient to offset the fall in advertising revenues which are running below market expectations. This means that operating profit for 2009 is likely to be towards the lower end of current market expectations," it said. Numis Securities predicts earnings before interest taxation and amortisation of about £40m.

The group has reduced its net debt by £29m to £448m at the start of the year, although only £16m came from cash generated from its ongoing operations. The remainder came from sterling strengthening against the euro.

John Fry, Johnston's chief executive, said the market "remains fragile", but added that the ad stability, cost cuts and covenant discussions mean it "will be well placed to benefit from any recovery in the economy as and when it emerges". Regional newspapers are waiting on a government report later this week that is expected to help secure the future of the industry by relaxing merger legislation.

Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
News
i100
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
PROMOTED VIDEO
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup