Regional publisher Johnston Press has announced it is inviting offers for the company after failing to put together a new refinancing package to repay £220m worth of debt.
Investment bankers Rothschild will handle the sale and hope to sell the company as a single entity.
However it is likely that some rival publishers may bid only for certain assets, potentially paving the way for the 251-year-old company to be broken up.
In a statement issued to the London Stock Exchange at 7am this morning, JP said: “Since commencing the strategic review of financing options first announced in March 2017, the company has focussed on exploring all options available to it in relation to its £220 million due for repayment on 1 June 2019.
“Pursuant to this strategic review and in order to assess all strategic options to maximise value to its stakeholders, the board of Johnston Press announces today that it has decided to seek offers for the company.”
The company has been in discussions for months over ways of refinancing the debt pile that becomes repayable less than eight months from now.
Earlier this year HTFP reported that one of the options being looked at was offloading its pension scheme to the Pensions Protection Fund, allowing a new owner to take control free of pension liabilities.
JP’s current share price is hovering around the 3p mark giving it a notional market capitalisation of just under £4m, although the company’s prize asset, the i, is estimated to have a market value of around £60m having delivered around £12m in profits since its acquisition.
Other assets in major cities such as Leeds and Edinburgh could potentially be of interest to other regional publishing groups seeking to expand their own geographical footprints.
Both the other major regional publishing groups, Newsquest and Reach plc, have been in expansionary mode over recent years, with Reach, formerly Trinity Mirror, acquiring first Local World in 2014 and then Richard Desmond’s Express & Star titles this year.
Meanwhile Newsquest has bought up the Dunfermline-based Romanes Media Group, North Wales publisher NWN Media, and the Carlisle-based CN Group, as well as having an audacious bid for Norwich-based Archant rebuffed.
JP’s two biggest current shareholders are the hedge fund Crystal Amber, run by Richard Bernstein, and the Norwegian investor Christen Ager-Hanssen, while the biggest holder of the debt is GoldenTree, a US-based hedge fund.
Mr Ager-Hanssen, who last year launched an abortive bid to take control of the company, has previously claimed the board was planning to put it into adminstration ahead of a pre-packaged sale, although today’s developments would appear to dispel that.
Johnston Press was founded as F. Johnston and Co in Falkirk in 1767 and for most of its existence it was a small, family-owned publisher owning mainly weekly titles in Scotland.
However the company grew exponentially in the 1980s and 1990s as a result of a series of acquisitions, notably The Scotsman, The Yorkshire Post and Sir Richard Storey’s Portsmouth and Sunderland Newspapers, which owned The News, Portsmouth and the Sunderland Echo.
Although this transformed the company into one of the biggest players in the UK regional media, it also saddled it with a level of debt that now appears to have proved unsustainable.
Today’s move follows the departure of former BBC and Microsoft executive Ashley Highfield as JP’s chief executive in May after seven years in charge. The company is now being run by David King, previously chief financial officer.
The full Stock Exchange statement reads as follows:
“Since commencing the strategic review of financing options first announced in March 2017, the Company has focussed on exploring all options available to it in relation to its £220 million outstanding 8.625% senior secured notes due for repayment on 1 June 2019. Pursuant to this strategic review and in order to assess all strategic options to maximise value to its stakeholders, the Board of Johnston Press announces today that it has decided to seek offers for the Company.
“The Panel on Takeovers and Mergers (the “Takeover Panel”) has agreed that any discussions with third parties may be conducted within the context of a “formal sale process” (as defined in the City Code on Takeovers and Mergers (the “Takeover Code”)) to enable conversations with parties interested in making a proposal to take place on a confidential basis. The Company is not in discussions with any potential offerors or in receipt of any approaches at the time of this announcement.
“Parties with a potential interest in making a proposal should contact Rothschild.
“It is currently expected that any party interested in participating in the formal sale process will receive certain information on Johnston Press as part of Phase One, following which interested parties shall be invited to submit their proposals to Rothschild. It is currently expected that any party progressing into Phase Two of the formal sale process will, at the appropriate time, enter into a confidentiality agreement with Johnston Press on terms satisfactory to the Board of Johnston Press and on the same terms, in all material respects, as other interested parties. Further announcements regarding timings for the formal sale process will be made when appropriate.
“The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it is participating in the formal sale process. Following this announcement, the Company is now considered to be in an “offer period” as defined in the Takeover Code, and the dealing disclosure requirements listed below, and other restrictions on dealing in the Company’s securities, will apply.
“There can be no certainty that any offer will be made for Johnston Press, nor that any transaction will be executed, nor as to terms of any such offer or transaction.
“The Board of Johnston Press reserves the right to alter or terminate the process at any time and in such cases will make an announcement as appropriate. The Board of Johnston Press also reserves the right to reject any approach or terminate discussions with any interested party at any time.
“The Company will continue to update all stakeholders on the formal sale process and other aspects of the strategic review as and when appropriate.”