Johnston rights issue

Published on Wednesday 14 May 2008 21:44

JOHNSTON Press announced a heavily discounted rights issue yesterday, offering shareholders one new share for each share held, at 53p each – a 61 per cent discount on Tuesday's closing price.

The company, which owns The Scotsman, also unveiled plans to sell a 20 per cent stake in the business to Malaysian investment firm Usaha Tegas.

In a statement yesterday, Johnston Press said the rights issue was "a proactive measure to recapitalise the business".

Johnston Press also admitted that, without the proceeds of a subscription to new shares and the rights issue, it could have been in breach of the group's loan covenants.

Tim Bowdler, chief executive of Johnston Press, welcomed the investment by Usaha Tegas, which cost the Malaysian firm around 120 million.

Bowdler said the moves positioned the business "more strongly in the continued development of its market-leading community media franchises".

Ralph Marshall, executive director of the Malaysian company, said: "Usaha Tegas believes in the potential of Johnston Press."

The rights issue came as Johnston Press unveiled a 7.1 per cent drop in like-for-like advertising revenues in the 17 weeks to 26 April.

Shares in Johnston Press closed down 20.5p, or 15.1 per cent, yesterday at 115.25p.

Founding family sees its grip on 350-year-old group slip

YESTERDAY'S move marks a further decline in the influence of the family that gave Johnston Press its name.

The Johnstons' printing business was set up more than 350 years ago as F Johnston and Son. It published its first newspaper, the Falkirk Herald, 78 years later, in 1845, under Archibald Johnston, whose son, Fred Johnston, pictured left, was at the helm of the company for a remarkable 53 years.

The Johnston family lost control over the firm in 1988 when it was listed on the Stock Exchange as Johnston Press.

But, until now, the family were still influential in the company, with Freddie Johnston, a descendent of the founder, a non-executive director.

Yesterday's developments will reduce the family's stake in the company to just 7.6 per cent – down from their previous share of 19.5 per cent.

It is expected that Freddie Johnston is likely to retire from the board in the near future,

At the time of flotation, the family owned 59 per cent of the company and, although they have never sold large numbers of shares, their stake has become diluted through various share issues over the years.