Johnston Press ‘will listen to rescue proposal from Ager-hanssen’
JOHNSTON Press last night appealed to its largest shareholder to submit a rescue plan after he raised concerns the troubled newspaper owner is heading for insolvency.
Christen Ager-hanssen, a Norwegian entrepreneur who owns the Swedish version of Metro, has built a 20pc stake in the publisher of the i and more than 200 regional titles. The self-describer “streetfighter” and “crazy mother------” has been an outspoken critic of the board of Johnston Press (JP) since first investing a year ago.
In a letter seen by The Daily Telegraph he demanded information on whether JP is considering administration as part of its lengthy talks with restructuring advisers. He asked whether a pre-packaged deal in which the 250-year-old publisher’s assets would be immediately acquired from administrators by a new entity was under discussion “in my capacity as a potential funder and prospective rescuer of and/ or bidder for the company’s assets”.
Pre-packaged sales can be controversial among creditors but can also preserve jobs and ensure uninterrupted trading.
It is understood from separate sources that a pre-packaged deal is one of the options under early consideration at Johnston. Several potentially less controversial ways to resolve its financial problems would need to be explored first, however. They could include sales of newspapers or property, or a debt-for-equity swap with bondholders, led by the US hedge fund Goldentree.
A spokesman for Johnston Press last night declined to comment on any insolvency discussions but said: “We confirm we received a letter from Mr Ager-hanssen over the weekend. We will, of course, respond to him this week. If Mr Ager-hanssen does have a workable proposal to refinance the business, we look forward to receiving this and we will invite him to provide more detail. We have updated the market on a number of occasions. No decisions have been taken and we are not going to comment on market speculation.” The publisher has been in talks with restructuring advisers for more than a year as it approaches a £220m bond repayment deadline next June. The debt costs Johnston more than £1.5m per month in interest.
Sliding revenues and sustained losses mean it will not be able to refinance the debt on commercial terms. Investors have retreated to leave Johnston valued at only £3.5m. Following a Telegraph report, Johnston last month admitted it is considering offloading its pension scheme to the Pension Protection Fund (PPF) under a rare procedure known as a Regulated Apportionment Arrangement. Such a manoeuvre is only possible when a company is facing insolvency within 12 months.
John Ralfe, the independent pensions expert, said: “The good news is that under the RAA the 5,000 pension scheme members will receive compensation from the PPF, but the bad news is this is less than the full pension promise they were expecting. End-to-end the average loss is about 15pc, and it can be more in some cases.”
The pension scheme has a funding deficit of £47m and costs Johnston around £900,000 per month in top up payments. As well as bondholders, JP is discussing its plans with pension trustees and regulators. Its fractious relationship with its biggest shareholder could prove an obstacle to progress.
The publisher warned in its annual report: “In the event that consensual amendments to the group’s capital structure cannot be agreed with relevant stakeholders, alternative options for the restructuring or refinancing of the bonds prior to June 2019 will be explored as part of the ongoing strategic review process.”
Johnston’s performance update last said revenues were down 9pc so far this year, in line with expectations.