Johnston Press £360 million refinancing deal

JOHNSTON Press, the multi-media company, yesterday unveiled a £360 million refinancing package which was hailed by chief executive Ashley Highfield as a “milestone” for the business.

Ashley Highfield, CEO of Johnston Press

The deal will enable the group, owner of The Scotsman, Scotland on Sunday and Edinburgh Evening News, to replace its existing loan and credit agreement and focus on delivering its digital-led strategy.

It says the capital refinancing plan will allow the company to return to revenue growth and generate surplus cash that can be reinvested in its operations.

The plan involves the issue of £220m in bonds and a rights issue to raise £137.7m. The remaining sum will be raised via a £2.3m share placing. There is also a new £25m credit facility.

Highfield, pictured below, who joined the company in November 2011, said: “Johnston Press has already achieved much in turning around our business performance, with 2013 marking a return to underlying operating profit growth for the first time in seven years. The refinancing of the business is another key milestone.”

The newly-placed shares are priced at 17p, a 27.7 per cent discount to the closing middle-market price per ordinary share on 7 May.

The deeply-discounted rights issue is on the basis of 6.52 new shares at 3p for every one currently held. This represents an 87.2 per cent discount to the closing middle-market price per ordinary share on the same day. Shares yesterday closed down 27 per cent or 6.5p at 17.5p.

In a statement to the London Stock Exchange, the company said it has used its strong operating cash flow and asset sales to reduce its net debt by more than 30 per cent from £476.8m as at 31 December 2008 to £302m at 28 December last year. On 1 May it stood at £311.9m.

The capital plan will be put to shareholders at a general meeting in London on 27 May. Panmure Gordon is the sponsor, while Panmure Gordon and JP Morgan Cazenove are acting as joint bookrunners and joint underwriters. Rothschild is providing financial advice in relation to the plan.

Johnston Press also announced an advertising tie-up with Sky, which will invest £5 million into the company which owns 13 paid-for daily newspapers, 196 paid-for weekly newspapers, 39 free titles, ten lifestyle magazines and 198 local news and e-commerce websites. Johnston Press operates in eight regions: Scotland, the North-East, West Yorkshire, the North West & Isle of Man, South Yorkshire, the South, Midlands and Northern Ireland.

In yesterday’s statement the company said newspapers will remain a primary revenue stream for many years to come but the web and apps, accessed from PCs, tablets and smartphones, “are becoming as important, if not more so, as an access method for an increasing percentage of the group’s audience”.

The company said it is aiming to put digital at the heart of its business.