O'Brien scrutinised as INM deadline looms

Published May 13, 2009


Dublin - With just days to go before executives at Independent News & Media (INM) have to secure a standstill agreement with its bondholders, the Broadcasting Commission of Ireland (BCI) has announced that it would scrutinise shareholder Denis O'Brien's ownership of a variety of media assets.

INM is the parent company of Independent Newspapers, the owner of Business Report.

Given next Monday's maturity deadline for the e200 million (R2.3 billion) bond, any standstill arrangement would have to be agreed by tomorrow.

It would have to win the agreement of at least 75 percent of the bondholders by value.

According to reports in The Irish Times this week, the BCI has the power to revoke licences, request their divestiture or stop media mergers.

Dublin analysts believe O'Brien, whose Communicorp group owns a number of national and regional radio stations, is committed to INM and will seek a solution to any problems raised by the BCI.

"It's likely to be little more than an inconvenience for him, as the regulators will not want to do anything that might risk adding to unemployment numbers," said one analyst.

O'Brien's firm commitment is regarded as necessary for INM to effect a successful conclusion to its precarious debt situation.

INM management is in tense negotiations with its banks and bondholders, and their advisers, to agree the terms of a debt standstill arrangement. In terms of the proposed agreement, no party would take any action to enforce any claim for payment during the standstill period, which would extend to the end of next month.

INM management has told bondholders that the standstill period is necessary to provide time to complete discussions with bondholders, banks, and top shareholders O'Brien and Tony O'Reilly, aimed at rescheduling all the group's debt and ensuring the provision of sufficient working capital.

O'Brien and O'Reilly each controls about 26 percent of INM.

Dublin-based analysts said this week that it was difficult to see what INM management could hope to achieve by the end of next month that it could not have achieved in the past few months.

One suggestion is that the debtholders and O'Reilly might be persuaded, at this very late stage, to allow O'Brien to take control.

When INM released its financial 2008 results at the end of last month, management said it was likely to default on the e200m bonds and was seeking a possible bailout from its two top shareholders. Since the release of the results and the news of the possible default, the INM share price has firmed to 28 euro cents late yesterday from 23c.

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