Regional publisher Johnston Press has confirmed that is in talks over a debt refinancing deal that could see its pension scheme offloaded to the pensions regulator.
The company has been in discussions since last November over ways of refinancing £220m worth of debt that becomes repayable on 1 June 2019 – just under a year from now.
Last night it confirmed that one of the options being looked at is a restructuring mechanism known as a Regulated Apportionment Arrangement or RAA.
Such a deal would allow JP to detach itself from its pension scheme, which would then effectively come under the control of the Pensions Protection Fund, a ‘lifeboat’ scheme operated by The Pensions Regulator.
Last night’s statement followed a report in yesterday’s Daily Telegraph that an RAA was one of the options being discussed between JP and its bondholders.
It read: “Johnston Press notes today’s press reports regarding the company being in discussions regarding a Regulated Apportionment Arrangement with the pension trustees and pensions regulator (“RAA”).
“The company confirms that an RAA is one of a number of potential strategic options for restructuring or refinancing of the bond being considered by the company and its advisers and in respect of which the company expects to discuss with relevant parties in due course.”
In an earlier trading update yesterday, JP said no agreement had yet been reached on the refinancing of the bonds.
The biggest portion of the £220m debt pile is owned by Golden Tree Asset Management, a US-owned hedge fund.
The Telegraph story speculated that any restructuring could see Golden Tree take control of JP, but the company has not commented on this aspect of the report.
According to the Pensions Regulator website, an RAA is an arrangement which allows a financially troubled employer to detach itself from its liabilities in respect of a defined benefit pension scheme.
It involves severing the link between the sponsoring employer and the pension scheme , meaning that the liabilities of the scheme will normally pass to the pensions lifeboat, the PPF.
As reported on HTFP yesterday, the trading update revealed that JP revenues were down 9pc year-on-year in the period 1 January to 31 May, with ad revenues hit by the new GDPR privacy rules that came into force last month.
The company said it remained in an “extremely challenging” commercial environment and warned of the likely need for more cost savings later in the year.
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Does anyone think there will even be a JP in a year’s time? Fifty-fifty at best I’d say. The words “financially troubled” toll like a death knell here. Good luck if you’re depending on this scheme to fund your retirement.
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Market capitalisation now less than £8m. Shares @ 7p yesterday. Zombie company.
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This move would diminish the value of your pension by at least 10% as it is capped at 90% maximum. Even though many have been made redundant the fools at JP are still messing with them.
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Years of bad decision making, short term, knee jerk savings,complacency and an acceptance of under performance have led the main regional press groups( not just JP) into the crippling financial state they find themselves in,attempting to offload pensions,which benefits the company not the employee,is a sure sign of just how bad things have become, I know as it’s happened where I am too
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The real problem is very bad management decisions. Seduced by the possible cost savings of digital they threw in the print towel before the fight had even begun. Put all their eggs in the digital nest. But were caught out when digital can’t be properly monetised. Ended up giving the news away free on their excuses for websites and created instant competition for their papers. If that’s not pure stupidity I don’t know what is. They compounded it by digging in their heels and persisting with the obvious folly. The irony is that the only thing Ashley did was to buy the I. Can the fools not see a good quality product will sell. Just use the net for hard breaking news and promoting the weekly paper. They couldn’t run a bath!!
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with staff cut to the bone it is very hard to see how JP can cut costs any more, unless they sell off papers. Problem is, will anyone want them as the quality has declined so much, despite the hard work of those left behind after the journocide of past few years? These sound like desperate times for JP staff, and I am sure we all wish them luck.
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@paperboy. In regards to selling titles the only possibilities that spring instantly to mind in the southern half of the country will depend solely on Iliffe’s ambitions. Trinity closed down all their old titles in the Midlands even though in 2012-13 illiffe massively expanded and grew some of them over night especially MK and Northampton Herald. If they really are serious about getting a foot hold back then Bedford, Luton, Northampton and MK would massively appeal to them. Anyone else though has already shut down in these areas so they’re unlike to have any interest as I’m guessing is the same in much of the rest of England. I never worked North of the boarder however so can’t comment on the on the lay of the land there.
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Deeply concerning news, not just for Johnston employees. I wouldn’t trust any of the other big regional groups not to look at wriggling out of their pension responsibilities.TAKE FINANCIAL ADVICE NOW and consider transferring your pension pots elsewhere or cash them in if over 55 and the plan allows.
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to TheDeadDigitalHorse:
I admire your tenacity in repeatedly making this same point about how quality products would sell. However, is it possible for you to point out a single example of what you mean? I’m sure even the nitwits at JP would be grateful for you shining a light on your simple recipe for success!
I’m sure you must have seen many such examples, such is the strength of your conviction, but let’s just start with one please. Over to you.
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Formerly loyal follower.
I think they have some papers in the South that were once highly profitable, until the futile and belated chase of the digital crock of gold started. My guess is some papers might be absorbed as slip pages into others , cutting production costs. That would mean the loss of some formerly wonderful weeklies going back as far as the 1800s. Like most of JPs management, that is purely guesswork though. The next year will be decisive for the poor devils making a living at JP.
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If it transpires – heaven forbid – that the hard-working staff of JP have their pension entitlements slashed by 10 per cent, I take it that it goes without saying that the directors of the company will be taking a similar hit on their pension pots.
What’s that I see coming in out of the clouds – another flying pig?
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JP is proposing to off-load its pension liabilities to the Pension Protection Fund (PPF) while continuing to trade as a going concern. Therefore, JP’s board and management get to continue taking bonusses while pensioners take a 10% cut in their pension benefits.
Most people will be of the opinion that the PPF is for businesses which have failed, in fact, the Fund’s own website says that they would only take on a pension fund if there was a “qualifying insolvency event in relation to the employer”.
The PPF talks about entering an assessment period and says that it will withdraw from the scheme if “the employer has been rescued as a going concern”.
Whether the company goes bust or simply off-loads the pension and continues trading makes no difference to pensioners since their benefits will be cut either way.
Is it fair that JP gets to walk away from its liabilities leaving other pension funds to take over its responsibilities through the pension fund levy?
Please correct me if if my understanding is incorrect.
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