Montgomery's Mecom looks at selling off assets amid tough trading conditions
LONDON - Mecom, the European newspaper publisher run by former Mirror Group boss David Montgomery, has secured a two-month stay of execution as it attempts to renegotiate its debts.
The company, which has debts of almost £600m, is in talks with its banks about amending its overdraft.
The group has struck a deal with its lenders, which involves several conditions. In return the lenders will not delay checking whether Mecom has breached its covenants from December 31 to February 28.
In return, Mecom is to pay a one-off fee of £2.35m to its banks and increase its interest payments by equivalent of a 1.75 point rise.
The advertising downturn has left Mecom struggling after it underwent a period of rapid expansion, following a flotation on the stock market in March 2005.
Mecom is trying to sell non-core assets, with the company's Norwegian newspaper business Edda Media, its Dutch subsidiary AD NieuwsMedia and Danish ad agency SP3 all expected to come under the hammer.
Mecom has released a statement to the London Stock Exchange, in which Montgomery, said: "The deterioration in global economic activity is continuing to affect advertising adversely in our markets.
"The board has recognised that in the light of these continuing market conditions we need to reduce our leverage and is confident of reaching an agreement on a long term solution, including disposals, in the first quarter of the new year.
"We continue to believe that Mecom's operating model is the right one and progress continues to be made in restructuring the cost base and developing new revenue streams."
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