Johnston Press slumps as it battles £220m debts

Johnston Press shares were hammered yesterday after the troubled newspaper publisher revealed it was in rescue talks that could see it sell its pension fund.

The owner of the i newspaper, The Scotsman and 200 local newspapers is in crisis talks with US hedge fund Golden Tree about restructuring its crippling £220m debts.

One of the options being considered is a so- called Regulated Apportionment Arrangement, which would allow it to dump its £609m pension scheme into the Pension Protection Fund.

If it goes down this road, Golden Tree would take control of Johnston Press.

However, these types of arrangement are extremely rare and would need to be approved by both the Pensions Regulator and the pension lifeboat fund.

In a separate trading update, Johnston reported a 9pc fall in revenue in the first five months of the year, which sent shares plummeting 11.1pc, or 0.95p, to a record low of 7.55p.

The publisher said the EU’s tough new data protection rules had hit digital revenues. ‘ We expect to see continued pressure on revenues in the second half of the year and a requirement for cost savings,’ it added.

The FTSE 100 fell 0.7pc, or 54.49 points, to 7686.8 after the pound strengthened sharply against both the dollar and the euro. The

FTSE 250 edged 0.28pc, or 58.74 points lower, to 21051.86.

Analysts predict the situation at distressed advertising giant WPP will ‘get worse before it gets better’.

Berenberg says fees will come under pressure following the departure of chief executive Martin Sorrell, which will lead to a sharp fall in margins over the next two years. The warning comes amid speculation that Sorrell’s exit could result in the firm losing key contracts or even see it broken up and sold to rivals.

In a further blow, Berenberg slashed WPP’s rating to ‘sell’ as concerns grow over the group’s future profitability.

Sorrell, 73, made a shock return to the City with S4 Capital 48 hours after leaving the company he founded amid allegations of misconduct, which he denies.

In a note, Alastair Reid, analyst at Berenberg, said: ‘Regardless of the reasons for the recent management change, WPP’s first-quarter relative performance versus peers, particularly in North America, showed that all is not well from an operational perspective.

‘We think that this will prove more difficult and costly to fix than consensus expects.’

Shares trundled 3pc lower, or 37.5p, to 1213p.

Carnival was rooted to the bottom of the FTSE 100 after Morgan Stanley slashed its target price from 5100p to 4800p to reflect falling

demand for cruises and higher fuel costs. Shares sank 6.4pc, or 312p, to 4561p.

Royal Bank of scotland was the second biggest faller on the bluechip index after the Government sold 7.7pc of its 70pc stake in the bank at a £2.1bn loss. Shares slumped 5.3pc, or 14.9p, to 266p. Shares in office space provider

IWG flopped after Lone Star, the US private equity firm, backed away from a potential deal.

However, analyst Andrew Shepherd-Barron at broker Peel Hunt believes there will still be a competitive auction for the firm, with Prime Opportunities, TDR Capital and Starwood Capital still thought to be in the hunt.

Despite this, the broker cut IWG’s rating from ‘buy’ to ‘hold’, given its shares are already above estimates. IWG shares dipped 2pc, or 6.6p, to 313.3p.

On AIM, shares in private jet services firm Gama Aviation nose dived 12.6pc, or 28.5p, to 198p after it reported flat trading and warned of ‘somewhat challenging’ conditions in Europe.