Trading conditions and the significant level of debt of Independent News & Media (INM) underlined the need for a substantial and urgent restructuring, the publishers of Business Report said on Friday.
The fortunes of the group are in decline, with revenue, advertising and circulation figures dropping significantly in the 45 weeks to November 9, according to an interim management statement.
INM said total group revenues declined by 3 percent or 4.1 percent in euros; advertising by 5.4 percent or 7.2 percent in euros.
However, operating costs were reduced by 0.7 percent or 1.5 percent in euros on the same period last year.
The Sunday Times of London said, without naming any sources, the group planned to ask its lenders to write off up to e100 million (R1.1 billion).
There is speculation in Dublin that if the banks do not agree to a write-off, INM will be put into administration within the next few months.
The group’s difficulties were compounded last week when the share price slumped to an all-time low of 6c. This rules out any prospects of a rights issue to raise funds to repay some of the hefty and increasing debt burden.
The slump to 6c was caused by the decision of an institutional shareholder to “throw in the towel” and offload as much as 7 million INM shares on Wednesday and Thursday.
The company has interests in the Republic of Ireland, Northern Ireland and South Africa.
INM has appointed Investec and Hawkpoint to review its options in relation to its South African business.
It said it had been encouraged by the degree of interest shown by a number of parties in the operations as it decided whether a disposal was deliverable on acceptable terms. A sale on acceptable terms would suggest a price of about R2bn.
In the statement, INM said that trading conditions had remained challenging as had been anticipated since the announcement of the group’s 2012 first-half results in August.
“In Ireland, high unemployment, a challenged banking sector and concern surrounding a further difficult budget in December 2012 continue to impact on consumer confidence. In South Africa, consumer confidence remains subdued.”
It said the focus on achieving continued cost savings had helped to mitigate some of the revenue decline in the period, with total costs down 0.7 percent on the same period last year, despite significant general inflationary pressures in South Africa in excess of 7 percent.
INM said it continued to engage with lenders, with a view to refinancing its bank debt in advance of its maturity in May 2014.