Independent buys a month’s reprieve

May 18, 2009

REUTERS— Neil Collins is a Reuters columnist. The views expressed are his own —

Tony O’Reilly has managed to retire from the company he built before the edifice crumbles, but it has been a close run thing.

Two weeks after he stepped down after 36 years, Dublin-based Independent News and Media has scrambled a standstill agreement with the holders of a 200 million euro bond which was due for repayment on Monday.

The bankers are putting up 15 million euros, and the bondholders have agreed to hold off until June 26, in the hope that enough bits of the empire can be sold to save it.

Here’s Verivox, described on its website as “one of Europe’s largest independent consumer portals for energy and telecoms products”. Then there is Cashcade, “a leading force in the rapidly expanding interactive gaming market”, and Independent’s outdoor advertising business in South Africa. There may not be a queue of eager buyers for these little treasures, at least not at prices which make a serious impact on its 1.4 billion euro debt pile.

There is also the heavily listing flagship of The Independent, the loss-making UK newspaper which is available to any buyer who can find a pound coin. He would also have to take on the contingent liabilities in the form of future losses and redundancy agreements, which change the arithmetic somewhat.

Since the London Evening Standard bagged the last oligarch, the potential purchasers of trophy newspaper assets are as rare as buyers of the Independent on Sunday.

The curiosity in this tale is the price of Independent shares. At 31 pence, the business is still valued at 230 million pounds, which might appear to be enough to support a rescue rights issue. The difficulty is the O’Reilly family holding, 28.5 percent, and that of Denis O’Brien with 26 percent.

Their inability to agree is splendidly Irish, and the best that incoming chairman Brian Hillery could manage when announcing the post-Tony board in March was that the factions were “working towards a common goal in the interests of all shareholders”. Despite today’s standstill, that common goal might still be a sticky end.

(Edited by David Evans)

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