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.
The company, which owns more than 200 local and regional titles including the Yorkshire Post, The Scotsman and national daily the i, announced the move to shareholders this morning.
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.”
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And so the ship goes down. Thank goodness Captain Highfield managed to get off in the nick of time!
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Quelle surprise! Who on earth would buy this shambles in its entirety. Cherry picking then plenty of closures IMHO.
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Well what a surprise, not
So after all the denials, the selling off,the closures,the consolidations,the ‘strategic reviews’ the assurances that there was no big plan in place other than local job cut decisions, they put themselves up for sale.
I just hope those poor souls still working there have ready made exit plans in place before they too are deemed surplus to requirements
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The chances of any of the other giants taking it over without falling foul of the competition authorities are slim. Wouldn’t it be wonderful if it was broken up with lots of little local takeovers?
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I’m sure there’ll be regional publishing vultures circling to pick over the carcass of JP looking for those divisions with enough meat on the bone to be viable under new ownership.
With the bigger 6-7 publishers desperate for cash and burdened with papers very few are buying and staff numbers out of sync with the revenues being brought in, others will follow suit and put themselves up for sale too, but why anyone would want damaged goods with their best by dates long odder heaven only knows.
Watch this space
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Apologies typo:
‘Odder’ s/be ; ‘passed’
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Take away the I paper and what have you got? Big city dailies like Leeds selling approx 10,000 down from well over 200,000. Websites that are poor and inefficient with few local adverts. Huge investment needed in staff and IT with revenue streams still falling heavily. Small papers will struggle to attract buyers and is it worth buying larger papers? The likes of Reach are already online in Leeds, might as well bring out their own printed papers rather than buying the remnants of JP.
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As mentioned above, take away the i which makes approx £1m profit a month, you have a company that makes little to no money at all. I think either Newsquest or Reach will bid, Newsquest will buy and do what they do best, we all know what that is!
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The Scotsman, Scotland on Sunday and Edinburgh Evening News were always a bad fit for JP, and still, I would argue, have a future as a standalone national media platform. It should be possible to attract both public and private financial support to make this happen. There are, in my opinion, a lot of good journalists at Orchard Brae House. Protecting their jobs should fall, in the first instance, to the NUJ and the Scottish Government to consider how best to extricate the Edinburgh titles from the JP shambles.
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It is sad that a lot of once superb weekly papers are likely to close because of this, or be merged with other titles. Looking at the dreadful share price over the years it was inevitable. I feel for all those good people working hard and trying to make a living with JP papers. The company is whitebait and the sharks are circling.
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Ashley Highfield has a lot to answer for. Yes, much of the debt was accumulated before he arrived. But credit where credit is due – he is the one who destroyed print products to put all eggs in the digital basket, with arguably the worst websites of any newspaper group, and appalling digital revenues to boot. He should have been at the helm when it breaks up.
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I was at the Derbyshire Times 40 years ago when staff were gathered together and told that our publishers, Wilfred Edmunds Ltd, had sold out to a company called F. Johnston & Co of Falkirk. It was their first move into England and, of course, we had never heard of them. In the intervening four decades, all manner of new technology has been introduced to the industry but it seems at virtually every step of the way this has been taken on board to cut costs and jobs and not to improve the product.
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I hate to say I told you so, but… The company in my opinion, was run by clowns who knew nothing whatsoever about the newspaper industry. They chased the digital dream and were caught short when it couldn’t be properly monetised. They believed in it so much that they basically abandoned their local weeklies and hundreds of talented staff were allowed to go. These papers are now mostly beyond rescue. The only hope for the future is the Viking sailing to the rescue. Ashley Highfield in my opinion has a hell of a lot to answer for with his unworkable digital nightmare.
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Why would any investor want to ‘Buy it Now’. Wait until they go bust or into administration and buy it for a song.
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Make no mistake – this is the final, disastrous legacy of chief executives Tim Bowdler and Ashley Highfield, (and no doubt many others on the JP Board).
As a former JP member of staff, I have seen the real consequences of their decisions in terms of human cost, as well as the collapse in quality and reputation of so many of JP’s papers.
One small point about what I perceived as an inference in the article that buying the likes of “The Yorkshire Post and Portsmouth and Sunderland Newspapers, which owned The News, Portsmouth and the Sunderland Echo” was an over-reach?
It wasn’t.
These were good, profitable buys.
What killed the company was the disastrous £300m acqusition on Bowdler’s watch of groups of Irish newspapers – which always looked colossally overpriced – and ultimately were to prove virtually worthless.
From that moment on, the company was holed beneath the waterline. It only made things worse when new captain Ashley Highfield abandoned a print ship from which so much could still have been salvaged and put everyone in leaky digital lifeboats.
It makes me so angry that characters like these walk away with no consequences.
But today my thoughts and best wishes are with all those good people suffering continuing uncertainty and anxiety at JP, as well as those chucked from the sinking ship in recent years who struggled to recover.
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The only way this business will have new owners is from a debt-for-equity swap, a pre-pack or by titles being bought out of administration. The business can’t possibly be sold to anyone as it stands.
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Sorry to say it but staff at JP are right to be concerned,those at other groups too as I feel news of one of the bigger players toppling and looking to sell up will prompt other,once bigger publishing groups, to follow suit,none are in strong positions, all are suffering huge fail offs in cooy sales and collapsed advertising revenues, all are weighed down with too many managers drawing big salaries but contributing little or nothing to the bottom line and none have sustainable business plans in place to diversify enough into other markets.
Some, no doubt, will cherry pick and invest in the parts of their businesses which are viable ; magazines,specialist publishing,outside events etc, whilst looking to offload the papers and the rest to anyone daft enough to buy them.
It’s a worrying time for those who remain at the bigger publishers and I fear the announcements and crunch will come in the run up to year end.
Desperate times, but not that unexpected.
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My local paper was once privately owned and hit a peak of sales of just over 20,000 a week.
Johnston Press managed the marvellous feat of cutting this to about 3,000.
Congratulations to the board. You achieved what managers told us you were happy to do, sacrifice on the altar of a digital boom.
But you were worshipping a false God.
This is the price. To be paid not by the well-heeled , but by the people who worked so hard to salvage something.
Well done JP.
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So let’s get this correct.
There’s over £200million pound of debt due for repayment and according to a lot of you on here who are more intrenched in JP than me very few of the titles other than the i are doing much in terms of revenue or are dying a slow deliberate death. The digital offering is about the worst out there so will need a complete overhaul costing many millions no doubt to.
Then we have the fact that If someone was to come in they will also take on the heavy burden under TUPE of having to pay off any staff that they choose to make redundant based on all their many years of employment in some cases as well as the pensions issue that is a time bomb waiting to explode.
That’s just a brief outline but I’m struggling to see why anyone would put themselves in a hole that deep in what is a struggling industry all while they are cutting costs at a rate of knots in their own operations already.
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This ought to act as a wake up call to anyone in the larger regional publishers who still believes the dire situation their company ,and entire industry, is in is a temporary blip which will pass, it won’t,as today’s announcement makes very clear.
There’s no long term future in local newspaper publishing on the scale we’ve known for decades,you’ve only to at the graph of any local papers ABC copy sales figures over the past 4-5 years to see the consistent, huge and steep decline in a relatively short period of time,majority of the best folk have left and all remaining jobs are volatile,If one of the biggest players is starting to crumble you can be sure others will call time too.
Hopefully many staff will have already started to put the feelers out before the market is swamped with soon to be ex employees chasing a handful of jobs in the coming months.
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They have recently taken out all their print SD’s & MD’s & replaced them with digital sycophants which led to revenue plummeting. Nobody left in JP who understands newspapers just a senior management milking it for all they can.
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There was even sadness from the Royal Navy as the Bismarck went down…
Not from me; I can’t wait to see the JP propellers slip beneath the waves.
JUST DIE
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I remember when my boss at Leeds came back from a management meeting to tell us we were now working for Johnston Press. He said: ‘Well at least they’re a safe pair of hands.’
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Absolute disgrace. JP should never have been allowed near the Scotsman/Scotland on Sunday. Once great newspapers destroyed by incompetent London suits who then just walk away with inflated pay-offs to their next victim. Any chance DC Thomson would be interested? Might be a monopolies problem.
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