Johnston Press appeals to pension trustees to back restructuring

THE newspaper publisher Johnston Press is appealing to the trustees of its £600m pension fund to join in a radical restructuring of the company to prevent its collapse under heavy debts.

As it revealed half-year results showing sustained pressure on the scores of local newspapers that form the core of its business, Johnston Press said it had opened discussions with its pension trustees around a potential debt-forequity swap with its bondholders.

The company owes £220m to lenders in bonds that are due to be repaid in less than two years.

Johnston Press admitted that the decline of its local circulation and advertising revenues meant it was unlikely to be able to refinance the bonds and that “could have a material impact on the group’s operations and its ability to continue as a going concern”.

Ashley Highfield, the chief executive, who is attempting to engineer a deal with bondholders that could see them write off some of the debt in exchange for shares, said he was focused on securing the approval of pension trustees. Johnston Press has definedbenefit liabilities of more than £600m and a funding deficit of £53m.

Mr Highfield said: “The pension trustees are a very important stakeholder. It is evident that there is common ground and everyone is broadly agreed on where we need to get to.”

The US hedge fund Goldentree is Johnston Press’s biggest lender, holding bonds with a face value of about £70m. The group’s market value is only £11m.

Johnston Press continues to be battered by the digital forces that have hit local newspapers over the last decade. In the first half, newspaper sales were down 11.5pc on last year, excluding the boost from the takeover of the i national title last April. On the same basis display advertising was down 12.5pc and classifieds by nearly 30pc. The overall decline on last year was 15.7pc, despite digital growth.

Including i, which increased its circulation and advertising sales, Johnston Press’s total first-half revenues were £103.3m, down 8.4pc. It made a pre-tax loss of £10.2m. Excluding exceptionals, Johnston Press made a pre-tax profit of £6.7m, down from £9.7m a year ago.