The chief executive of the second largest publisher of local papers in the UK has expressed his delight that the company’s proposed £360m overall refinance package will now go ahead as planned, after shareholders gave it their approval.
The strategy, unveiled earlier this month, will see regional newspaper publisher Johnston Press slash its £300m debt by a third, to less than £200m.
JP has estimated the refinancing package, approved at the publisher’s annual general meeting in London, will raise £220m through issuing bonds, and a further £140m by issuing and placing shares.
It is a move which could signal an easing of pressure on the group, which has been forced to slash costs in recent years in order to service its heavy debt burden.
JP delivered operating profit of £54.2m in 2013, just under a seventh of the £360m debt total. Over the last two years it has cut 1,600 staff, to the current total of around 4,200, and closed a number of newspaper offices while raising print cover prices.
The Johnston Press share price has reflected its debt level, declining from a pre-recession high of around £6 a share to below 10p a share in 2011, and 2012. Today it was trading at 16.5p.
In an official statement issued by the company, Ashley Highfield (pictured), chief executive of Johnston Press, expressed his gratitude to the finance team for all the hard work and commitment they had shown in getting the company to its new position.
He said approval of the overall £360m refinance package was “great news” for Johnston Press, and, combined with the raising of £225m through a new bond, would allow the company to pay off its existing debt.
This would put the company on a much more stable footing, he added, and allow Johnston Press to look to returning to growth once more, and a much more prosperous future.
He said: “The refinancing means we are no longer subject to quarterly tests by the banks. Our new arrangements represent a considerable achievement, and the process has revealed a significant and encouraging level of external confidence in our business, and our ability to grow.
“But, we still have challenging times ahead. Our strategy is to transform our company by transitioning to digital faster than our competitors.
“In doing so we will remain the number one provider of local news and information services and become the number one provider of marketing solutions for small businesses.
“We simply must start growing revenues while still making cost efficiencies in order to be able to invest in our future and continue to pay our debt down. This is the time to really grow our company.”
Of the 690,294,608 ordinary shares in issue as of yesterday, 67.13 per cent were used to vote. And 99.65 per cent of the votes cast on the refinancing package approved of the deal.
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“We simply must start growing revenues while still making cost efficiencies … ” So, more job losses, possibly more out-sourcing, if quantity, not quality is key. Transitioning to digital faster than competitors sounds all well and good, if the websites will be viewed and income generated. It is alarming, however, not to read anything concerning JP plans to boost readership or advertising revenues in paid for print. AH will, presumably, set up digital (his area of expertise) and then leave with his bonuses, whilst the papers are in tatters. AH has done a great job getting the company debt down, but the savings seem consistently to be made at the cost of newsprint and its production staff.
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The only “great news” will be when Slashley starts taking on – not laying off – skilled journalists to make his products, both print and digital, great again. Until then, more decline!
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Where is he ? (drums fingers on table…..looks at watch)
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Shares now at 5p. Does this meet with shareholders approval?
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Great news…4.85p share price…how does that sit with you Mr Bank Manager?
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4.5bn more shares, more pressure to produce profits/dividend = more redundancies
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Share price now at 4.5p, down 73% on the day. Market capitalisation now just £31.06m. What on earth is going on here?
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The debt is being paid off with bonds – in other words more debt, as the company will have to honour those bonds at who knows what rate. So it’s throwing bad money after bad and calling the same situation by another, less dirty name. The debt is still there, it hasn’t been magicked away. But hopefully the company will now put the priority on its severely diminished products rather than just acting purely as debt repayment machine.
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Oldadrep – If your pathetic comment is aimed at me, it rather goes against your last attack on me stating, “Bet he’s not missed” (by former colleagues, I presume). I shan’t alter my opinions to suit you, or my moniker because it offends you. Please comment on stories, not about me.
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Those who are commenting on the share price are frankly making themselves look fools. There are millions more shares in the market, that’s what a rights issue is and why the share price is where it is currently.
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Well said Bob!
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Well some poor chap has found himself attached to one of AH’s emails this morning. Apparently he’s now £6500 down on his 100,000 shares. As a JP employee who has had barely a sniff of a pay rise in 5 years my heart bleeds for him.
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Bingo! I was made redundant two years ago- and it’s a horrible experience. But don’t we all have to move on at some stage?. I didn’t expect my barbed e mail to cause you to reflect- of course not. I hope (for the sake of your family, if no one else) that you don’t see yourself as a victim in perpetuity (JP Cost Cut Victim on the headstone perhaps).
And I apologise for the not missed line- that was below the belt.
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