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Regional press news - this story published 14 May 2008

Johnston Press to sell shares to manage £700m debt

by holdthefrontpage staff

Johnston Press needs to raise £212m in funding to "weather current cyclical pressures" and manage net debt of £700m, the company announced today.

In its latest interim management statement Johnston Press showed declines in print advertising but increases in digital revenue for the 17-week year-on-year period up to April 26, 2008.

Now it plans to raise £212m by selling shares in the company which it says will position the group more strongly as it progresses with investments to become a multi-channel community media company.

The statement said: "Given the recent reduction in consumer confidence, and deteriorating economic forecasts, the board believes that the prudent action is to raise equity capital in order to reduce debt.

"Taking into account these factors.....the board concluded that the group should raise £212m in new equity.....to provide the appropriate balance between equity and debt for the group.

"The group is working hard on managing its cost base and providing there is no further deterioration in the advertising environment, expects to deliver a satisfactory result for 2008 in very difficult circumstances."

Some of the statement's other key elements are:

Total advertising revenues were 5.7 per cent down on the same period in 2007.

Total advertising revenues for the first eight weeks of 2008 had declined year-on-year by 4.2 per cent due to falls in property, employment and motors.

The decline in overall advertising for the 17-week period was 7.1 per cent. Property advertising was down 12.1 per cent, motors down 16.4 per cent and employment down 5.3 per cent.

Within the overall advertising decline of 7.1 per cent, print advertising fell by 9.1 per cent while digital advertising continued the success of 2007 and grew by 56.8 per cent.

Newspaper sales revenue was flat year-on-year with cover price increases offsetting circulation declines which were at similar levels to recent years.

Contract printing revenue is 6.8 per cent ahead of last year due to the benefit of the News International contract at Portsmouth which did not start until the second half of 2007.