Ireland's Independent News & Media is seeking 43 million euros of fresh capital from new and existing investors as it works through the final phases of a multi-year debt restructuring plan to protect its cornerstone stake in APN News & Media, which publishes the New Zealand Herald newspaper.
The Dublin-based company will sell up to 430.8 million new shares while existing shareholders will be offered about 183.5 million shares in a 1-for-3 issue at 7 euro cents apiece. INM needs to slash its bank debt and pension obligations and put the media group on a firmer footing. The capital raise builds on INM's 134 million euro sale of its South African business earlier this year, which it used to debt.
The offer, which needs shareholder approval, would let INM cut core debt to 118 million euros, about a quarter of what it owed at the end of 2012, and well down from the 1.4 billion euros racked up during its aggressive worldwide expansion before the global financial crisis.
Billionaire Dennis O'Brien, who wrested control of the group from the O'Reilly family last year, has committed to maintaining his 29 percent stake and fellow Irish businessman Dermot Desmond plans to increase his stake to 15 percent from 6.4 percent.
"The capital raise will complete a complex, multi-stage restructuring programme agreed with our lenders and implemented with the support of a wide range of stakeholders," chief executive Vincent Crowley said in a statement. "I wish to thank our shareholders, lenders and staff whose support has been critical to the group's transformation."
If the equity-raising isn't completed before the end of this year, its lenders can force the Irish group to sell its cornerstone stake in Australasian media group APN, a unit INM sees as "a valuable and currently under-valued asset given its exposure to radio and outdoor advertising, as well as publishing."
If that happens, there's a risk the exit of the APN stake would be at a fire-sale price, and "would not enable achievement of the best possible terms, particularly given the low valuations attributed to media assets in the prevailing economic conditions," according to offer document.
"Furthermore, disposal of the APN stake would mean that the geographic diversity of the group would be further diminished," it said.
INM and fellow APN shareholder Allan Gray Australia forced a board-room shake-out of the Australian media group earlier this year after baulking at APN's plans to raise capital to shore up its own debt-plagued books.
APN has been selling assets and cutting costs as it tries to return to regular profitability while operating in a sector plagued by dwindling revenue streams and an unwillingness by customers to pay for news.
The Australasian company's dual-listed shares were unchanged at 48 cents on the NZX, and 46 Australian cents on the ASX.