Independent News & Media in talks over €200m bond

Incoming chief executive describes total group sales of €1.47bn as "resilient"
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The Independent Online

Independent News & Media made a profit of €212m (£189m) before tax in 2008, the Dublin-based group revealed yesterday, as its directors said they were confident about their attempts to renegotiate a €200m bond due for repayment later this month.

Revenues at INM, the owner of The Independent, were "resilient" in the face of global economic turmoil, according to the chief operating officer, Gavin O'Reilly, who will formally take over from his father Sir Anthony as group chief executive this month.

The group said advertising revenues fell by 3.8 per cent last year while circulation revenues rose slightly. "The market was particularly challenging in the second half," Mr O'Reilly said. "It had been relatively buoyant in the first six months of the year, but that changed, especially after Lehman Brothers went bang in September."

Taking into account exceptional items – writedowns on the value of some of the group's assets and charges related to a cost-cutting programme – INM slipped to a €161.4m loss last year. The writedowns accounted for €291m of the €373m of exceptional items, with the company adding: "The directors believe that when the economic climate recovers, these intangible asset valuations will improve."

The group has put in place a plan to tackle its debts, which stood at €1.3bn at the end of 2008, down €5.5m from a year earlier. It has identified "a number of non-core assets to be disposed," and the proceeds will be used to further reduce the debt pile.

INM is in talks about selling its 18 per cent stake in Cashcade, the online bingo operator, as well as a 49 per cent stake in the German price comparison website Verivox. INM Outdoor, the South African advertising business, is also to be sold and the three deals, which could be worth up to €150m, should complete by the end of the summer.

The directors are currently in talks to renegotiate a €200m bond that matures on 18 May, having been unable to raise the funds to repay the debt because of tensions on international credit markets. INM said it was seeking a "standstill agreement" with its bondholders and banks while a solution was agreed, adding: "Discussions to date have indicated a willingness from all parties to seek agreement and, while subject to material uncertainty, the directors remain confident that an agreement will be reached with them which is acceptable to the group."

Mr O'Reilly said advertising markets had shown "no sign of improving" this year, with the first quarter proving tougher than expected. INM expects earnings before interest, taxation, depreciation and amortisation to come in at up to €270m in 2009.

Denis O'Brien, the company's second-biggest shareholder, said: "INM still faces a number of significant challenges, but the new management team is working hard to address the immediate issues and progress has been made.

"Operationally the business has a number of valuable assets, which with focused management and improving economic circumstances could return value to equity and debt holders alike."