Owner of the Scotsman and i newspapers enters administration

https://www.theguardian.com/business/2018/nov/16/owner-of-the-scotsman-and-i-newspapers-enters-administration

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Johnston Press, the owner of the i, the Scotsman and Yorkshire Post, has gone into administration after being brought to its knees by debts of more than £200m.

The publicly-listed newspaper publisher, which put itself up for sale last month in a last-ditch effort to save the business from going under, has gone into administration admitting that its shares are now worthless.

Under the process, the group, which publishes more than 200 regional titles, will move into a newly incorporated company controlled by the bondholders who control its debt. The company was due to pay the bondholders about £220m in June next year.

The company said that it had received offers for parts of its business – the owner of the Daily Mail had considered a bid for its crown jewel asset, the i – but “none of the offers received delivered sufficient value” to save the company.

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“There were offers for the whole group, as well as for some individual titles,” said David King, Johnston’s chief executive. “Each approach was examined carefully. Yet none of these offers, or combinations of offers, would have raised enough money to repay the £220m debt that we are obliged to settle in June 2019, nor did they allow the defined benefit pension scheme to remain attached to the company.”

King, who took over as chief executive after the surprise departure of Ashley Highfield after seven years in May, sent an email to the company’s 2,000-plus staff saying their jobs are safe – for now.

“Our operations will continue uninterrupted and so it is important that you turn up for work as normal – your employment contract will be transferring to the new company and you will continue to be paid as normal,” said King, in an email to staff seen by the Guardian. “The newspapers and websites will continue to be published as usual. As I have stressed on several occasions, our business is profitable with good margins. Our debt has constrained us.”

The bondholders have agreed to inject cash into the business to reduce its debt.

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King said that any staff who had shares in Johnston Press – as well as Christen Ager-Hanssen, who owns the Metro newspaper in Sweden and is the largest shareholder with a 25% stake – have lost their investments and the company will be de-listed from the stock exchange on Monday.

“Despite our attempts to engage, none of our shareholders has made any proposal to Johnston Press regarding the restructuring or refinancing of the bonds generally or submitted bids,” said King.

The company also said that 250 current and former Johnston Press staff are set to see the value of their pensions fall. Under the terms of the deal to shift the assets to a new company, Johnston Press’s defined benefit schemes will not transfer and will shift to the government’s Pension Protection Fund, resulting in lower payments.