Johnston Press has been bought from administration by JPIMedia, a new company led by chief executive David King and with backing a consortium led by Golden Tree Asset Management.
The pre-pack move wipes out Johnston Press’s dents, principally a £220 million loan due for repayment in June but also including trade suppliers. And £35 million has been promised by the investors to fund their new business. This should secure the future of 200 titles which include the Yorkshire Post, Scotsman and I.
The company has struggled to meet repayments of £20 million a year on its debt mountain, resulting in heavy costs across the group, affecting the quality of the journalism and production. This culminated in appointment of administrators on Friday following speculate that a sale of the business was imminent.
The debt remains, but at £85 million with an extension until 2023. It is, says King, the only way to avoid a piecemeal sell off of titles as the group foundered. Business now he says, can continue without interruption.
In the longer term sales are likely, but not at firesafe prices. Most regional title share backfire functions, sub editing and sales, which will require untangling. The daily free newspaper I has already been linked to Associated Newspapers and will be a simpler spin off.
At this point trade suppliers will be unsure about how much if any of their money they will get back, but with the new owners pledging continuity and business as usual, they will not treat them harshly for risk of losing supply.
One objection has come from Norwegian investor Christen Ager-Hanssen who had spent £3 million to achieve a more than 20% stake. He loses everthing and has called the sale “blatant pre-planned corporate theft”.
Gareth Ward
Overambitious acquisitions have piled on the debts for Johnston Press, threatening the survival of the business. Now the company has gone into administration to be subject to a prepack acquisition.
