Monday, November 19, 2018

News: Johnston Press cuts debts in pre-pack deal

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Historic publisher Johnston Press has been forced to undertake a controversial pre-pack administration deal having failed to secure funds to reduce its debts.

Headquartered in Edinburgh, Johnston Press is one of the largest local and regional multimedia organisations in the UK and operates a £60m printing facility in Rotherham.

Over-hanging the company was a £220m bond due for repayment on 1 June 2019. After a strategic review of financing options, Johnston Press put itself up for sale in October.

Bosses told staff on Friday that the group was heading into administration and by Saturday, JPIMedia, a newly-formed company owned by bondholders of Johnston Press plc, announced that it had acquired the business out of administration.

As part of the transaction, the bondholders have agreed to reduce the level of senior secured debt by £135m (more than 60%), from £220m to £85m, with extended debt maturity to December 2023. Additionally, the bondholders have provided £35m of new money to provide further additional funding for the business.

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The acquisition of the Johnston Press business by JPIMedia secures jobs and the future of its brands and titles but it means that shareholders will be hit as the company delists from the stock exchange.

A defined-benefit pension scheme, with around 250 members, will not move over to the new company and will instead move to the Pension Protection Fund - the safety net that provides compensation to members of eligible defined benefit pension schemes when things go wrong.

The publisher of titles including the Yorkshire Post and Sheffield Star operates a state-of-the-art facility on the site of the former Dinnington colliery which includes one of the most modern and fastest presses in the world. The Daily Express, Daily Star, Daily Star Sunday and Sunday Express are currently printed at Dinnington. Other major customers including News UK, Guardian Media Group, Trinity Regional titles (formerly Local World), Tindle Newspapers, as well as many niche publications.

David King, CEO of JPIMedia, said: "The sale of the business to JPIMedia is an important one for the Johnston Press businesses as it ensures that operations can continue as normal, with employees' rights maintained, suppliers paid, and newspapers printed.

"We will focus on ensuring the group's titles continue to publish the high-quality journalism we are known for and which has never been more important. I look forward to working with JPIMedia to assess and implement the opportunities available to us in the future, underpinned by a stronger balance sheet."

John Ensall, director of JPIMedia, added: "In the absence of another financial solution being available for the business, we are pleased to have reached this agreement to acquire Johnston Press, to protect the value of the business, preserve jobs and allow for the uninterrupted publication of its websites and newspapers.

"As part of this transaction we have reduced the level of net debt very significantly and invested £35m to put the business in a far stronger financial position.

"We look forward to working with the management team as they embark on the next chapter in Johnston Press’s story in the media sector, with the resources to support local and national journalism and embrace the digital future."

Johnston Press website

Images: Johnston Press

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