Ex-Mirror boss Montgomery buys Scotsman in cut-price deal
New owner for The Scotsman newspaper
Former News of the World editor and Daily Mirror executive David Montgomery has acquired The Scotsman and dozens of other regional and local papers in a cut-price £10.2 million deal.
Mr Montgomery’s National World takeover vehicle is buying the titles from a group of New York hedge funds who have owned them since 2018.
He has appointed former Daily Record executive and PR company owner Mark Hollinshead as chief commercial officer. Danny Cammiade, who was chief operating officer with former owner Johnston Press and more recently worked as chief executive at Tindle Newspapers, will be appointed as a non-executive director.
JPI Media put itself up for sale at the beginning of the year and has struggled to find a buyer. Record owner Reach, The Herald and DC Thomson all expressed interest.
National World said it expects the takeover of JPI, which also publishes The Yorkshire Post, Falkirk Herald, Fife Free Press, Sheffield Star, Sunderland Echo and Portsmouth News, to complete on 2 January.
It said the JPI acquisition will provide a platform for National World to “implement its strategy of creating a sustainable local online news publishing model”.
JPI is estimated to have posted £85 million in revenues and £6 million in earnings for the past year.
The company was formed by the funds which bought into the former Johnston Press and then acquired the company when it plunged into administration.
Mark Hollinshead: new chief commercial officer (pic: Terry Murden)
The consortium included Goldentree Asset Management, Benefit Street Partners, CarVal and Fidelity, who also injected £35m of new capital into the company to put it on a more sustainable footing.
JP’s huge debts, which had been a burden on any attempts to invest in the business, were renegotiated in the hope of bringing some stability to the company.
The debt was reduced by more than 60% from £220m to £85m, with extended debt maturity to December 2023.
Former home of The Scotsman titles in Holyrood Road, now the HQ of games company RockStar North (pic: Terry Murden)
However, it was always believed that JPIMedia’s ownership would only last until it found a buyer. It sold The i newspaper to Daily Mail owner DMGT for almost £50 million, double the amount it paid in 2016.
Mr Montgomery, chairman of National World, was also previously chief executive of Mirror Group Newspapers. He has targeted a deal for JPI since National World was launched with a stock market flotation last year.
The business will be acquired with no debt and has no historic defined benefit pension obligations.
The company will provide £6.5m in working capital facilities to JPI Group post completion.
National World said it has funded the deal from its cash resources – £5.2m in cash at completion and two deferred payments of £2.5m each on 31 March 2022 and 31 March 2023 – and by issuing £8.4 million in loan notes. It plans to issue further loan notes during January.
Mediaforce (Holdings), a company controlled by Malcolm Denmark, is subscribing for £6 million in loan notes. As part of the agreement Mediaforce may appoint two directors to the board of National World if it has a shareholding of more than 20%.
Alasdair Locke: subscribing for loan notes
Scottish oil tycoon Alasdair Locke, former chairman of the oil services company Abbot Group, is subscribing for £2 million. He owns 5m ordinary shares in the company (9.26% of the issued share capital). He has also agreed to subscribe for a further £2m of loan notes during January 2021 should further funding be required.
Others subscribing for £100,000 each are David Montgomery, Vijay Vaghela, John Rowe and Steve Barber, while Mark Hollinshead is subscribing for £25,000.
Mr Montgomery said: “JPI’s historic publishing brands represent the best in journalism and have reliably served their communities and supported local businesses, in some cases for centuries, and never more than in the last year.
“National World will uphold this tradition and implement modern technology to grow the business across a wider footprint based on high quality, unique content.
“I am pleased with the appointment of Mark Hollinshead as chief commercial officer and welcome Daniel Cammiade to the board.
“We have a very experienced board with extensive knowledge in digital and print publishing to deliver our transformational strategy for growth.”
Daily circulation of The Scotsman for July to December 2019 (Audit Bureau of Circulations) was 14,417 of which about half (7,575) were shop-bought single copies. The remainder were subscription and bulk buys. The title is no longer registered with ABC.
Expected Timetable for issue of Prospectus
February 2021: Publication of a shareholder circular and notice of general meeting
March 2021: General meeting of the company and publication of the prospectus
April 2021: Re-admission of the ordinary shares to trading.