Scotsman owner fails to find trade buyer
Johnston Press plunges into administration and sold to bondholders
200 titles including The Scotsman are now controlled by the holders of the company’s debt
Johnston Press, owner of The Scotsman, the ‘i’ newspaper and 200 other titles, has plunged into administration and is being sold to its bondholders.
The company, which is saddled with more than £220 million of debt, failed to find a buyer for the group and ownership will transfer to a newly-incorporated group of companies controlled by the holders of the bonds.
It said this is the best option for ensuring the group’s businesses will trade as normal and jobs will be protected.
In a statement issued tonight, the company said the pension scheme will not transfer and the Pension Protection Fund has been notified about it entering the fund.
The shares have been declared worthless and the company will be de-listed from the stock exchange on Tuesday. Shareholders, including Christen Ager-Hanssen, who owns the Metro newspaper in Sweden and is the largest shareholder in JP with a 25% stake, have lost their investments.
“The board has concluded that none of the offers the company has received deliver sufficient value and has ended the formal sale process,” said the company which put itself up for sale last month.
“The board has concluded that there is no value in the ordinary shares of the company.
“The board has resolved that the best remaining option is for the company and its principal subsidiaries to be placed into administration.
“It is envisaged that, subject to administration orders being made, the group’s businesses and assets will then be sold to a newly-incorporated group of companies controlled by the holders of the bonds.
“The defined benefit pension scheme will not transfer. The Pension Protection Fund will be notified and the PPF, with the assistance of the Trustees of the Scheme, will then assess whether the scheme needs to enter the PPF.”
Johnston Press, one of the oldest newspaper groups in Britain, has its roots in Falkirk and still owns the Falkirk Herald as well as titles such as the Yorkshire Post and Sheffield Star. Under the previous management it embarked on a debt-fuelled spending spree, splashing out £160m on The Scotsman, Scotland on Sunday and Edinburgh Evening News. Its shares crashed 23% today, leaving the whole group, now headquartered in London, worth just £2.65m.
There has been speculation that the Daily Mail & General Trust would bid for the ‘i’ paper which JP acquired from the Russian owner of the Evening Standard in 2016 for £24m. It has been a rare success story, adding circulation and revenue.
But the company has struggled to grow the wider group and refinance its debts due to be agreed next June. On 11 October the company announced it had decided to seek offers and said tonight it has attracted “considerable interest, including several indicative offers from interested parties.
“However, after careful consideration of those indicative offers with assistance from advisers to the company’s group the board has concluded that none of those offers would result in net proceeds sufficient to enable the group to repay the amounts owed by it in respect of its senior secured notes.
“Based on the valuation of the group implied by those offers and given the level of liabilities in the group, the board has concluded that there is no longer any value in the ordinary shares of the company.
“The boards of directors of the company and each of those principal subsidiaries will be applying immediately and on an urgent basis to the courts in Scotland, England, and Northern Ireland for administration orders in respect of those companies.
“It is envisaged that, subject to the orders being made, all of the group’s businesses and substantially all of the group’s assets will then be sold to a newly-incorporated group of companies controlled by the holders of the bonds.
“Holders representing the required majority of the bonds have contractually agreed to support this transaction. The group believes this is the best remaining option available as it will preserve the jobs of the group’s employees and ensure that the group’s businesses will be carried on as normal. The group hopes that this transfer will be completed within the next 24 hours.
“The group operates a defined benefit pension scheme and, following formal notification by the Administrators to the Pension Protection Fund, the PPF, with the assistance of the Trustees of the Scheme, will then assess whether the Scheme should enter the PPF.
“If the scheme enters the PPF, the PPF will provide members with pension benefits from retirement based on the PPF compensation rules. Any defined contribution pension schemes in which the Group participates, which cover the majority of the Group’s current employees, should not be affected.
“As a result of the above, the board has concluded the FSP and the company confirms that it is no longer in an offer period under the code.
“In addition, the company has requested the suspension and subsequent cancellation of the company’s shares on the London Stock Exchange. The suspension is expected to take place with immediate effect with cancellation expected to follow on Tuesday.”