Independent News secures debt deal

Dublin - Ireland's Independent News & Media has struck a deal to cuts its debt by two thirds, its second restructuring in four years that will see its lenders take a stake in the group as part of a €40m rights issue.

Weighed down by debts, falling readership and reduced advertising, INM has been in talks with its lenders since last year and said on Friday that the agreement will cut its core debt to €118m, two times last year's operating profit.

The Dublin-based group was forced to strike a similar deal in 2009 when it handed a near 50% stake to its former bondholders, sold its flagship UK newspaper The Independent and some of its other overseas interests to help secure its future.

"This deal really gets us to an endgame where we've a core debt that's very manageable and have the funding in place to reposition the group for the structural challenges that all media companies are facing," Chief Executive Vincent Crowley told Reuters in a telephone interview.

"The revenue environment is tough, we've forecast for it to remain tough and this banking deal is predicated on a prudent set of assumptions. They're realistic and take account of the economy we face in this country which doesn't show any signs of a pick up."

Under the plan the company has until the end of the year to follow up the sale of its South African unit with a restructuring of its pension scheme, left with a deficit of €162m at the end of 2012, and the rights issue.

Crowley said its syndicate of eight banks would likely be left with a stake "somewhere in the teens" following the rights issue. They would take control of 70% of the company if the capital raising or pension restructuring are not agreed.

INM, in which telecoms billionaire Denis O'Brien holds a 29.9% stake, also reported on Friday that its operating profit fell 21% to €59.7m last year and that revenues for the first four months of 2013 were down 10%.

The 5.7% dip in advertising revenue seen in 2012 has more than doubled so far this year although it has been largely mitigated by cost cuts and Crowley said another 10% of staff would be laid off in the coming months.