Johnston Press lenders rejected £150m offer for business before collapse

Creditors of newspaper publisher face significant cash shortfall despite ‘pre-pack’ deal agreement

THE administrator of Johnston Press has revealed the newspaper publisher’s bondholders rejected a £150m offer for the business in the weeks leading up to its collapse, as it warned creditors they face a “significant” cash shortfall.

In a report for creditors released yesterday, Alixpartners said the publisher of the i newspaper received six offers for all or part of the business, the highest being for £150m for all of the group. None of the bidders was named.

The bids were reviewed but “ultimately, it was considered that none of the offers received, or any combination of them, would result in aggregate net proceeds sufficient to enable the group to repay the bonds in full”, the report said. The company had £220m in bonds that were due to be repaid by next summer.

Johnston Press put itself up for sale in October and was snapped by JPI Media, a holding company set up by some of the company’s bondholders, in a pre-pack sale by administrators earlier this month. The deal, which avoided job cuts, included a £35m cash injection and a 60pc cut to its £200m debt pile, with chief executive David King remaining in charge.

Alixpartners said the sale achieved was the best deal tabled, but warned that creditors still faced a “significant shortfall” of cash.

The creation of JPI Media angered Christen Ager-hanssen, the firm’s largest shareholder, who had a 25pc stake and has since set up a shareholder action group to protest against a deal he called “pre-planned corporate theft by a greedy US vulture fund”.

However, Alixpartners said in its report that eight of Johnston Press’s largest shareholders had been invited to participate in the sale process but “no shareholders submitted an offer for the group, or its parts”.

The company, which also owns The Scotsman and The Yorkshire Post, was hit by declines in print advertising that meant it was unable to pay down its debt pile, racked up during an acquisition spree more than a decade ago.

The six offers for Johnston Press also included one of up to £120m for all of the group excluding the i newspaper; and a bid for the i for £25m.

“Proceeding with a swift ‘pre-pack’ had the additional advantages of mitigating disruption to the business and importantly preserving jobs across the organisation,” said a spokesman for Alixpartners

The Pension Protection Fund, the lifeboat that will assume responsibility for Johnston Press’s pension scheme, has raised “concerns” about the sale, noting that it went into administration two days before it was due to make a monthly top-up payment into its underfunded defined benefit scheme.