Independent News agrees deal with bondholders

Independent News & Media Plc has agreed to a refinancing deal with bondholders that could give them a 47 per cent stake in the publishing group and roughly halving the interests of existing equity shareholders.

The Dublin-based media empire said yesterday it would swap €123m of an overdue €200m senior bond for a 46 per cent equity stake and then hold a rights issue for the balance of the note, including interest due, up to €94m.

The rights issue at five cents a share, an 81 per cent discount to Independent News' closing share price yesterday, will be fully underwritten by the bondholders, who will end up with a stake of around 47 per cent in the group if all existing shareholders subscribe to the issue.

If existing investors do not subscribe to the rights issue, then the bondholders would end up with a 76 percent stake in the group, which owns newspapers from Auckland to London.

The equity issue is conditional upon consent from 75 per cent of bondholders whom IN&M said were a diverse group of international, primarily institutional holders with a maximum 4.6 per cent individual holding arising from the deal.

The rights issue requires approval by shareholders at an extraordinary general meeting and can only begin once the equity issue is completed.

Independent News, which has been negotiating with its bondholders for months over the deal, said the agreement would cut its net debt by €350m through the debt-for- equity swap, the rights issue and planned disposals, including the sale of its South African advertising business.

The group added that the proposed senior debt facilities were based upon a four and a half year maturity.

"We now expect that all parties will move towards implementation of the restructuring without delay, including procuring necessary consents and approvals," Chief Executive Gavin O'Reilly said in a statement.

The deal would see the O'Reilly family stake in Independent News roughly halved to around 15 per cent and the holding of rival Denis O'Brien cut by a similar amount to around 14 per cent.

The two largest shareholders have been locked in battle since O'Brien ended a six-month truce earlier this month by demanding a U-turn on its South African disposal plan and seeking the sale or closure of the group's loss-making UK broadsheet titles.

O'Brien, an Irish telecommunications billionaire, had proposed a rival deal that would have given him a two thirds stake in the company via a €100 m investment.

But the company said Anthony O'Reilly, the patriarch of the O'Reilly family and currently the company's largest shareholder with a 28 per cent stake, would have blocked O'Brien's proposal.

A spokesman for O'Brien, who has forced a November emergency general meeting on two separate issues, declined to comment.