Investors have agreed to wipe out more than 60 per cent of the £220m debt owed to them by Johnston Press after taking over the regional publisher through newly-formed company JPI Media today.
The bondholders have agreed to extend the deadline for repayment of the outstanding £85m debt to December 2023 and have also announced £35m in additional funding for the new business.
JP announced late last night that it was going into administration, putting an end to the sales process through which it had sought a buyer to take on its considerable debts, which were largely pension-related.
The move is said to have secured jobs and the future of JP’s 200 titles, including the i paper, Scotsman and Yorkshire Post. JPI Media is now the fourth largest regional publisher in the UK.
John Ensall, director of JPI Media said: “In the absence of another financial solution being available for the business, we are pleased to have reached this agreement to acquire Johnston Press, to protect the value of the business, preserve jobs and allow for the uninterrupted publication of its websites and newspapers.
“As part of this transaction we have reduced the level of net debt very significantly and invested £35m to put the business in a far stronger financial position.
“We look forward to working with the management team as they embark on the next chapter in Johnston Press’s story in the media sector, with the resources to support local and national journalism and embrace the digital future.”
The majority bondholder is understood to be US hedge fund Goldentree Asset Management.
Meanwhile, Johnston Press’ largest shareholder, Christen Ager-Hanssen, has said he is instructing insolvency lawyers to take out an emergency injunction this weekend to block JP’s decision to go into administration.
The Danish businessman (pictured), whose investment firm Custos Group had a 25 per cent stake in JP, said his firm would do “everything in our power to overturn and unwind this abominable deal”.
In a hard-hitting statement shared on Twitter, Arger-Hanssen, who owns Sweden’s equivalent to the Metro newspaper, described the sale process, and the strategic review before it, as “nothing more than a complete sham”.
He said there was “plenty of time for us to have managed to put in place a refinancing [of the bond debt] had we only been given the chance”, with repayment not due until June next year.
JP said it had had “considerable interest” from potential buyers since putting itself up for sale last month, but that none of the offers delivered “sufficient value” to cover its debts.
Chief executive David King told staff in an email yesterday, seen by Press Gazette, that there had been offers for the whole group as well as for some individual titles.
Daily Mail-owner DMGT and regional publisher Newsquest are understood to have been among the interested parties.
Shareholders have been wiped out by the move to go into administration, with JP set to be delisted from the London Stock Exchange on Monday as its shares will have no value. Shares are currently trading at £2.50.
Staff are understood to be safe for now under the Transfer of Undertakings (Protection of Employment) Regulations, but future pension payments for 250 employees on the defined pension scheme will be affected as the scheme will not transfer over to the new owners.
King told staff that “operations will continue uninterrupted” and that the newspapers and websites will “continue to be published as normal”. He said he would retain his role with the new company.
“This has not been an easy decision for the board,” he said. “However, having explored a range of other options, this is the best available course of action and it is one that offers a chance for a brighter future for our business.
“As I have stressed on several occasions, our business is profitable with good margins. Our debt has constrained us.”
A JP editor, who asked not to be named, told Press Gazette the situation was a “mess” and described the restructuring as “desperate manoeuvres”.
They said the move to place the company into administration was “where things have been headed for a long time now – the debt simply isn’t sustainable”.
But added: “Will there be a day of reckoning for those well-paid chief executives who landed us in this mess? No.
“A lot of people’s pensions are going to suffer. A lot of people’s shares are now worthless. A lot of people will be looking to leave if they weren’t already. What a mess.
“We keep getting messages about not panicking, and how it’s business as usual. It would be much easier to swallow lines like that if we didn’t hear what was happening from other media outlets rather than from our own employers, or if we didn’t get told that the company was going into administration in an email sent at 9.30pm on a Friday night.
“Frankly the whole thing stinks.
“It stank when they bought a load of unprofitable Irish papers based on some ill-considered pipe dream, it stunk when [former JP chief executive] Ashley Highfield was paid millions whilst gutting newsrooms, and it stinks now that they’re making these desperate manoeuvres.”
The National Union of Journalists has called for “meaningful guarantees” to protect jobs and titles.
NUJ general secretary Michelle Stanistreet said: “We welcome the commitments made by the current management of Johnston Press that no jobs will be lost in this process and the terms and conditions of staff are protected.
“However, we have significant concerns about what the long-term intentions of the newly-created company will be.
“We want meaningful guarantees on the future and integrity of these titles and the livelihoods of staff, and a commitment that this is not a transition leading to a carve-up of the group motivated by asset-stripping rather than a commitment to journalism and publishing.”