IN&M cuts profit forecast as it moves to refinance

by Tristan O'Carroll, mediaweek.co.uk 12-Jun-09, 13:50

LONDON - Independent News & Media has said it is hopeful of refinancing a €200m bond by 26 June, although it slashed its pre-tax profit forecast for 2009.

Last month, IN&M negotiated a six-week "financial standstill" with its banks and bondholders, and secured €15m of fresh capital as it looks to refinance the €200m bond. The financial standstill runs to 26 June.

Today, at its AGM in Dublin, Dr Brian Hillery, the company's chairman, said discussions with lenders had shown a "willingness on the part of all parties to reach consensus".

He added: "Although the outcome is subject to material uncertainty, the directors believe, based on discussions to date, that terms will be reached that will be acceptable to the group and fair to all parties."

At the meeting, shareholder Denis O'Brien said the refinancing needed to be agreed soon to allow the company to refocus on its day-to-day business. He said: "If Independent News & Media is to fulfil its potential and be successful, we need the management focused on running the business, not distracted by a prolonged refinancing issue that should be resolvable with a dose of common sense.

He continued: "For long-term value to be restored in IN&M, an agreement that won't constrain the management's ability to turn the business around must be reached. If this doesn't happen, everybody will lose, not least the staff who deserve much better."

Chairman Hillery also flagged up a significant reduction in the company's expectations for its profitability in 2008. Whereas in April it expected operating profit before exceptional charges for 2009 to be between €200m and €230m, today the company forecast this figure will be "in the range of €180m to €210m".

He said: "The business environment remains extremely challenging for our group in each of our markets, with all major economies in recession and substantial reductions in advertising spend globally. However, our management have been relentlessly focussed on cost control and have led by example by taking substantial voluntary pay cuts."

The company's AGM statement did not refer to the future of its UK newspapers, The Independent and The Independent on Sunday.

Media Week revealed yesterday (11 June) that Alexander Lebedev, majority owner of the London Evening Standard, is understood to be in advanced talks to buy The Independent and The Independent on Sunday from Independent News & Media.