Regional publisher Johnston Press is under new ownership after its bondholders agreed to wipe out £135m of the company’s debts in return for control of the business.
A newly-formed company, JPIMedia, has taken charge of the 251-year-old publisher in a “pre-packaged” sale after it was briefly placed in administration earlier today.
The owners comprise the bondholders who were previously owed a total of £220m by JP and are headed by US-based hedge fund Golden Tree Asset Management.
They have agreed to wipe out £135m of the debt, extend the repayment period for the remaining £85m to 2023, and inject a further £35m of new money into the business.
The new owners says the deal will safeguard the future of the group and ensure that its 200-plus newspapers and websites will continue to operate as normal.
David King, pictured, formerly chief executive of Johnston Press, becomes CEO of JPIMedia and will continue to lead the business.
He 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.”
And Jeremy Clifford, JP’s editor-in-chief, hailed what he called “the start of a new chapter” in a series of posts on Twitter.
Wrote Jeremy: “It’s been quite a journey to get to where we are today and a new company JPIMedia. Our editorial values stay the same. Our great team of journalists will continue to bring you the news on all platforms. I thank them for what they do, day in, day out – especially during past 24 hours.
“All staff transfer to the new company which is on a much stronger footing. This is the start of a new chapter.”
But the deal has been described as “shameful” by Christen Ager-Hanssen, whose 25.06pc shareholding in the old JP was rendered worthless by the decision to take the company into administration on Friday night.
“Their actions today, ensuring their own jobs are safe, but sacrificing the pensions of their loyal staff, many of whom will no doubt also lose their jobs under the new ownership of a US hedge fund, is simply a disgrace and a vulgar display of the worst elements of capitalism,” he said.
JPIMedia says it will offer a defined contribution pension scheme to all employees but added that, as a consequence of the transaction, an “assessment period” has been triggered for JP’s existing defined-benefit pension scheme.
The company announced on Friday night that the pension scheme would not transfer to the new owners and that the government’s ‘lifeboat’ scheme, the Pension Protection Fund, would now assess whether the scheme needs to enter the PFF.
The National Union of Journalists has called for “meaningful guarantees” to protect jobs and titles across Johnston Press but described the loss of the defined benefit pension scheme as a “serious blow.”
General secretary Michelle Stanistreet said: “We welcome the commitments made by the current management of Johnston Press that no jobs will be lost in this process and the terms and conditions of staff are protected.
“However, we have significant concerns about what the long-term intentions of the newly-created company will be. We want meaningful guarantees on the future and integrity of these titles and the livelihoods of staff, and a commitment that this is not a transition leading to a carve-up of the group motivated by asset-stripping rather than a commitment to journalism and publishing.”
“Forcing the pension scheme into the PPF is a terrible blow for all of those members of the scheme and their future retirement plans, whilst the new owners are rewarded with a company free of its responsibilities and obligations to its pension fund.”
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Looks like this deal was cooked up as far back as September if the information on this twitter link is correct
https://mobile.twitter.com/cg_williams/status/1063784164690939904/photo/1
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This reminds me of a three-card trick you would see at a fun fair. The board win every time and the employee/pensioner is being made a mug of. After this latest sleight of hand the carnival continues. But no one is laughing bar the boys on the board.
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A “debt wipe-out” ? can they just lose £135 million and invest another £35 million….or will this mean that those monies will have to be accrued by selling some assets..ie losing staff,
Or am I just being cynical.
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Old snapper, they’ve not lost a penny. They’ve just acquired a business that made £40m ebitda last year for £220m, less £85m – the debt that they’ll carry forward into the new company – and a supposed investment of £35m. So, basically, they’ve bought a business delivering, say, £30m profit in 2018 for about £100m. Where else might one find an investment that pays an annual return of 30% on your money? My paltry cash isa gives me 0.9%!
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So does this open the door for any company with pension liabilities to effectively dump it and continue to trade? That’s certainly what it looks like.
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Let’s hope this “new board” are totally clear about the four very simple basic of the business!…1,Digital advertising for newspaper web sites is derived from newspaper advertising sold by ad reps locally. JP collapsed simply by collapsing the ad sales departments that provided the fodder for digital and astonishingly, then had the peanut brain idea that local advertisers would be happy with a typical call centre that (if you actually bothered to call it) takes ages to answer and then goes through a barrage of very annoying options.2, JP abanded newspapers sales departments, bill boards, all presence at local events and severely reduced their supply. As a result it became exceedingly difficult to actually find a copy for sale. 3, JP was famous for their constant, incredibly lenghty meetings about the meetings that so badly sapped sales time. Lastly, 4. JP was fantastically top heavy with managers who managed managers who managed managers who could not manage the basics of the business. This simply, is why they failed.
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Not convinced by some of the math quoted in the comments section.
Looks to me as if the bondholders have forgone £135m and risked a further £35m for a company with an “adjusted” EBITDA of £40m, that in cash terms, [less redundancy payments] is less than £30m and no doubt remains in free fall.
It’s a sad, sad, situation and I would not defend the moral or ethical pre-pack approach, however the inability to attract a single credible bid for any of the JPR assets suggests the bondholders investment carries a far greater risk than some earlier commentators have intimated.
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Bean counter…
You are niaeve if you believe there was no credible bid. The board didn’t want any credible bids. They just wanted to sell to the hedge fund and hold on to their highly paid jobs. Letting the Viking in would have meant they would all have been sacked. This whole scenario stinks. I hope CAH gets his injunction and stops this charade
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Johnston Press operated in a very risky way once it began swallowing up other local newspaper groups. The top management lost touch with reality as they demanded profit levels that became eye-watering.
Under previous ownership 10% profit on turnover was deemed reasonable. Johnston Press pressed for higher and higher figures – up to 40% and in one instance 50%, I have been told.
As a result, investment was cut, editorial budgets were squeezed as local managers raced to reach the targets.
Such mismanagement has seen many people lose their jobs.
At the time of this race for towards ridiculous profit margins, the company pushed the pension schemes down people’s throats.
Sold down the river, hardly does it justice.
I wait to see who will hold the directors of Johnston Press to account.
A Parliamentary committee inquiry is surely in order.
We may not get our pensions back but there will some satisfaction in seeing the fat cats squirm before MPs.
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I’m still struggling to understand how a company can be classed as insolvent 7 months before the debt falls due. Yes on paper I get it but I’m practise they’re not insolvent until the repayment day falls.
If I was the loyal staff over at JP I would be planning a walkout on mass to shut this whole thing down but unfortunately this will never happen and people will keep helping to lift the barrel of the gun that’s slowly being lifted to their head.
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Nick G
I assume you’re from the ad dept?
“Digital advertising for newspaper web sites is derived from newspaper advertising…”
I’m not sure what this means?
Digital ads arent financed by newspaper adverts,they are stand alone / packaged revenues, also you don’t mention lack of quality editorial content, reduced staffing levels in the editorial departments, lavkbofbphoyograohers abd a reliance on UGC to fill the papers.no me tin either of alternative new media on line competition offering a better response( and level of service in many instances) this leads to a fall off in copy sales numbers which leads to to fewer readers resulting in a less attractive offering to any potential advertisers.
Your points about meetings abc managers is valid across the industry but bad management and failure to adapt to new media whilst maintaining strong newspapersis also a huge part of JPs and the industry’s downfall
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Sorry, various typos due to trying to type and walk – not to be advised
* lack of photographers
* and
must try harder
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My thoughts remain with the staff whose pensions are being so shamelessly mucked about amid all this brave talk.
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We live in an unfair world in which workers’ get a raw deal. JP was doomed and administration which leads to a new company running the business is the best one could have hoped for from that scenario. But, the big issue is what is the real intention for the future? Is this a holding position from which JP will be carved up for sale/closures or will it prosper? Given the state of the industry and the fact a few quid hasn’t been put aside to protect pensions the doom and gloom that JP staff have had to live with for a long time, will continue. Why staff continue to do unpaid overtime is beyond me.
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Same dogs. Same….
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Does anyone seriously believe that this new regime will keep and maintain all the weekly and daily titles that they have ‘inherited’ ?
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Strikes me that the new owners – the former creditors – are now in a good position to start recovering the losses they ‘wrote off’ with a combination of income and in the long-term, asset stripping and strategic disposals.
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The situation at JP is really no different to the other bigger publishing groups; news paper sales in free fall, ad revenues decimated and not covering overheads, too many middle managers on large salaries doing nothing and adding nothing but costs to the bottom line,editorial departments ravaged and down to below the bare minimum, a growing reliance on using UGC to fill the templated pages,digital completely unable to be monetised and no long term plans to tackle the growing problems or to diversify into sustainable revenue creating operations.
My advice to all wishing and hoping things will improve at this new look JP ( and the other groups) is,it’s a worsening situation so think of yourselves now, before someone makes a decision about your future for you
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As Pete Townshend once wrote … meet the new boss, same as the old boss.
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EMAP saw the writing on the wall back in 1996 when they sold their regional titles to JP.
I remember that day at The Stamford Mercury office when our MD, John Broom, gave a stunned gathering the news – the first reaction was from the then editor Ken Thomas in his best Corporal Fraser impersonation – “We’re all doomed!”
How right he was
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A lot of people who predicted this debacle (many of them no longer commenting on HTFP) were criticised as doom mongers over the past ten years or so.
They will not be rejoicing at being proved right in their forecasts.
But it was always risky to look on the bright side of life with the dreadful JP management.
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I was made redundant in June 2017 and have a pension that is now handled by Scottish Widows (was Zurich) I need to know if this will be affected? I expect we will be informed?
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The question that needs asking (and answering) is why would a company that has had to buy JP out of administration because they can’t pay you what they owe allow the same management team to run the new business. Surely the people who failed miserably because they weren’t up to the job are the first ones you would replace? However if you just wanted a bunch of yes men…….
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High time that the trustees of the neglected Johnston Press pension scheme came out and made a statement about this sorry state of affairs. They should have been first out of the blocks, but so far only deafening silence. Who are these people, anyway?
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Despairingly your pension is not affected although it has always performed very badly as a fund so worth getting financial advice about moving it.
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@Caesar – afraid our pensions are very much affected!
And by the way, have you tried getting a transfer value lately??
Expect months and months of hanging around waiting, then make sure you are sitting down when you finally get the letter.
Exorbitant withdrawal fees (probably to prevent a run on the fund) are being applied – one colleague of mine lost, wait for it, close to £40K to get his hands on HIS money. Turned out he boxed clever as the entire fund he built up now belongs to him and his family – and not in the hands of the PPF…
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