Johnston Press has been acquired in a pre-pack deal by JPIMedia, a newly-formed company controlled by a consortium of Johnston’s debt investors led by US hedge fund GoldenTree Asset Management.
The group said the move safeguards its future, providing it with “a substantially de-levered balance sheet, new capital and a strong platform for its staff, operations and publications”.
As-yet-unnamed administrators were appointed to the publisher on Saturday (17 November) after the company issued a statement on Friday night to say that while the sale process of the business that was initiated last month had attracted “considerable interest”, but none of the offers had delivered “sufficient value”.
As a result, Johnston’s board had concluded “that there is no value in the ordinary shares of the company” and that administration was “the best remaining option” for the business and its principal subsidiaries.
Johnston’s decision to put itself up for sale followed a strategic review it initiated last year to find a solution to the repayment of £220m in high-yield bonds, which were set to mature in June 2019.
As part of the pre-pack transaction, JPIMedia’s bondholders have agreed to reduce the level of senior secured debt by £135m, to £85m, with extended debt maturity to December 2023. They have also provided £35m of new money to provide further additional funding for the business.
JPIMedia – which was incorporated on 24 September according to Companies House – said the acquisition “secures jobs and the future of its brands and titles”, including the i newspaper – which DMGT had been linked to a purchase of last week, prior to the pre-pack announcement – and more than 200 regional newspapers, including The Scotsman and The Yorkshire Post.
“JPIMedia’s shareholders recognise the vital role that local and regional media plays in the communities they serve and remain committed to protecting and enhancing the value of the business in the future,” the group said in a statement.
As a consequence of the transaction, an assessment period has been triggered for the defined-benefit pension scheme, which will not be transferred. The Pension Protection Fund (PPF) will be notified and the PPF, with the assistance of the trustees of the scheme, will then assess whether the scheme needs to enter the PPF. At the last count it had a deficit of £47.2m, and scheme assets of £561.4m.
JPIMedia said it will offer a defined contribution pension scheme to all employees.
Former Johnston Press chief executive David King, who has become chief executive of JPIMedia, said: “The sale of the business to JPIMedia is an important one for the Johnston Press businesses as it ensures that operations can continue as normal, with employees’ rights maintained, suppliers paid, and newspapers printed.
“We will focus on ensuring the group’s titles continue to publish the high-quality journalism we are known for and which has never been more important. I look forward to working with JPIMedia to assess and implement the opportunities available to us in the future, underpinned by a stronger balance sheet.”
Shares in Johnston Press were trading at 2.5p prior to the company being placed into administration. Its shares now have no value and have been suspended from trading today and the company will be officially delisted from the London Stock Exchange effective from tomorrow.
On his Twitter account the company’s chief executive Christen Ager-Hanssen has confirmed that Custos will sue both the board of directors and JPIMedia. In a statement published yesterday he called the pre-pack sale “not so much a corporate rescue as a blatant pre-planned corporate theft by bondholders”.