Board to consider funding options: Newspaper Publishing plans new investment

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The Independent Online
THE BOARD of Newspaper Publishing last night announced plans for new investment in both the Independent and Independent on Sunday.

Andreas Whittam Smith, chief executive of Newspaper Publishing, said that the company, which was in profit, was now well placed to draw up a business plan for 'a more aggressive and ambitious strategy of investing in the products'.

Among options being considered are borrowing from the company's banks and raising new capital from existing shareholders and from potential new investors. The company's foreign shareholders, El Pais and La Repubblica, are expected to increase their shareholdings from the present 18 per cent each.

Mr Whittam Smith said: 'What better shareholders could there be than El Pais and La Repubblica?'

The background to the board's statement yesterday was the breakdown of negotiations to merge the Independent on Sunday and the Observer. It was planned that a successful union would release cash to invest in the daily newspaper. Investment had been held down during the recession, and the company managed to remain profitable without using its overdraft facility.

Mr Whittam Smith said: 'During the recession we ran the company very strictly so that it remained cash positive. We feel now that we can run faster. The centrepiece of our new strategy will be a business plan resulting in investment in the three products - the Monday to Friday paper, the Saturday paper and the Sunday paper. The business plan will take some weeks. It should show how much money we need.'

A new chairman is likely to be appointed by the end of the month following the resignation of Sir Ralf Dahrendorf.

The board's statement said: 'The board is in discussion about the development of the Independent and the Independent on Sunday, in the absence of any combination with the Observer and in order to take full advantage of the improving economic climate.

'The board will consider a range of financing options, including the use of internal resources, bank borrowing and raising new capital from existing shareholders, and from potential new investors. In this connection, the principal shareholders have indicated a willingness to see an increase in their shareholdings. A further announcement will be made in due course describing the outcome of these deliberations, including details of such proposals as the board wishes to put to shareholders.

'We have been advised that Officine Meccaniche G Cerutti SpA, Italian manufacturers of machinery, including printing machinery, has acquired 491,800 ordinary shares (2.3 per cent) in Newspaper Publishing from the joint administrators of the Maxwell interests. The board of Newspaper Publishing is making contact with its new shareholder.'