Pressure on Irish parent of INMSA to clinch deal

PRESSURE is mounting on the Irish parents of Independent News & Media (INM) SA and its designated buyer, a consortium led by Sekunjalo Independent Media (SIM), to conclude the deal as it is worth far more than the initial R2bn price tag to Dublin-listed INM.

SIM chairman Iqbal Surve said yesterday that the full details of the consortium and funding partners would be made public on June 20. He said this was necessary to quell mounting speculation surrounding the backing of the transaction.

An Irish analyst who asked not to be named said: “This deal will effectively reduce INM’s debt it owes to the banks from €424m to €117m. There is a lock-up deal in place with the banks and if INM cannot do this deal, then the banks will put the entire group into liquidation.”

Last week, INM issued a circular to shareholders saying that a consortium of eight banks to which it owes its euro-denominated loans had agreed to write off €140m should the deal to sell the South African operations succeed.

It also gave details of the sale, including that the R2bn price tag was subject to adjustment and that INMSA would pay a dividend of up to R20m to its parent on completion of the deal.

Furthermore, €10m would be put into an escrow account to be retained as security for claims SIM may have against INM in terms of warranties and other possible breaches of the terms of agreement.

In February, SIM was announced as the preferred bidder for the South African newspaper group, which publishes The Star, Business Report, The Argus and 15 other titles.

At the time, INM said this was the highest bid for the operations.

INM will hold its annual general meeting next Friday, then an extra ordinary meeting on June 17, at which shareholders are expected to vote on the deal.

“The problem is that while the Sekunjalo consortium are the favoured bidders, the lack of real information around their consortium makes the banks and shareholders jumpy,” the analyst said.