Incisive's debt-for-equity swap to give management 25 per cent

Apax and its fellow investors could be left with as little as 2.5 per cent of the magazine publisher
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The Independent Online

Incisive Media, publisher of Accountancy Age and Computing magazines, is close to agreeing a debt-for-equity swap with its banks that could lead to management owning a quarter of the company.

The current majority owner, Apax Partners, the private equity giant, and fellow investors Caledonia Investors and Ingenious Media would be left with a stake as small as 2.5 per cent between them. Incisive's lenders are expected to conclude the deal by the end of this month.

Apax was keen to retain control of the business by injecting £20m into Incisive, but its lenders rebuffed the offer. Led by Royal Bank of Scotland, the near 20 lenders are also understood to have rejected an offer of between £100m-£200m for Incisive's UK business. On Friday, the Critical Information Group (CIG), a media acquisition company that made its stock exchange debut at the end of June, said that it had been in preliminary talks regarding a takeover.

A source close to Incisive said that CIG had been "a little bit naughty" making the announcement, as the banks had made it clear they were determined to finalise a debt-for-equity swap by the end of this month. Later that same day, CIG admitted that talks had already terminated.

Incisive breached the terms of its £225m debt from senior and mezzanine lenders in December. Management, Apax and the banks have been trying to restructure the loans ever since. A source close to the negotiations said that they had been "a nightmare", but confirmed that a deal should be completed within three weeks.

This should result in Incisive's management, led by its chief executive, Tim Weller, taking an initial 10 per cent stake, which would increase to 25 per cent if a series of performance-related targets are met.

Apax currently has a 59 per cent stake in the business, having paid £208m in 2006. Stephen Grabiner, Apax's high-profile media partner, led the deal and has built up an empire in the sector, which also includes a stake in Emap, a rival to Incisive.

Incisive also publishes in North America and Asia with titles including Legal Week, Hedge Funds Review and Insurance Age.

Another media company under the spotlight is Shed Media, the listed television production company behind the BBC2 film Filth: the Mary Whitehouse Story and the Channel 4 reality series Supernanny.

Shed, with a market capitalisation of over £50m, announced last month that it had been approached about a possible takeover by "a number of private-equity houses", believed to include Bowmark Capital and Lloyds TSB Development Capital. Earlier this year, Shed rejected an indicative approach from a consortium that included the company's executive directors.

Shed is due to announce its 2009 first-half results on 29 September.

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