Johnston Press ready to confirm success of its £212m rights issue

Published on Monday 23 June 2008 22:11

JOHNSTON Press, the publisher of The Scotsman, is today expected to reveal that it has completed a £212 million rights and subscription cash call.

The company is set to join Royal Bank of Scotland in successfully completing a move to refinance its business.

In May, Johnston Press announced its intention to raise a total of 212.3m in a heavily discounted one-for-one offer, priced at 53p per share – a 61 per cent discount on the share price on 13 May. As part of the total, 42.7m was also to be raised by subscription from the Malaysian investment firm, Usaha Tegas, run by media tycoon Tatparanandam Ananda Krishnan.

Johnston Press admitted in May that without the rights issue it could have been in breach of its loan covenants.

Shares in the company fell sharply earlier this month along with those of other firms conducting rights issues.

The price of shares in the Edinburgh-based firm at one point fell to 50p, with the company the victim of short selling. But the price recovered after the announcement by the Financial Services Authority that short sellers with more the 0.25 per cent of any company had to declare their hand.

Yesterday, US hedge fund Lone Pine Capital was forced to disclose a 0.44 per cent short position in Johnston Press.

Earlier this month, RBS set the benchmark for the post-credit crunch rights issues, winning the support for its 12 billion call from more than 95 per cent of its shareholders.

Johnston Press's cash call is far smaller scale but it will be judged a success if it passes RBS's percentage, as some City analysts expect it to.