O'Reilly quits Independent as debts mount

Published Mar 13, 2009


Dublin - Anthony O'Reilly will retire from the helm of Independent News & Media and hand the reins to his son Gavin, ending the Irish tycoon's career with the fate of their flagship London Independent paper in doubt.

Gavin O'Reilly said his father was leaving of his own will as he approached 73, but analysts also pointed to pressure from bankers to resolve a row with other major shareholder Denis O'Brien as a bond repayment deadline approached.

Independent News & Media, which O'Reilly built over four decades into a group spanning from New Zealand to Ireland, had seen its share price plunge to just 10 euro cents, a fraction of the price of its newspapers, as its debts mounted.

The shares traded 66 percent higher in morning trade after briefly doubling, as markets saw the announcement as a major step towards resolving the group's financing needs.

"It would appear that sanity has finally prevailed with the realisation that action is required in the face of a debt burden, slumping advertising revenue across all geographies and falling circulation particularly in the UK," Goodbody analyst Gerry Hennigan said.

O'Reilly, one of Ireland's most celebrated entrepreneurs and once one of the United States' highest paid executives when leading H.J. Heinz, has seen his empire hammered by the global credit crunch and worldwide recession.

Independent News & Media has a debt pile of €1.4 billion (about R18 billion), built up through overseas expansion, and faces a May deadline to pay a €200-million bond.

O'Brien, who has a 26 percent stake in INM as well as a separate business empire based on telecoms, has been at loggerheads with O'Reilly over INM's governance and strategic direction.

"Tony and Denis had never actually met before and when they met they managed to strike up a very friendly and purposeful relationship," Gavin O'Reilly said of his father and O'Brien, whom his family was branding a "dissident shareholder" just a few months ago.

From rugby to fine tableware

O'Reilly, who rose to prominence as a rugby international, will formally retire on his 73rd birthday in May but his son, who is chief operating officer, will take over as chief executive designate immediately.

"Together, we have expanded this Irish newspaper group and enshrined a fiercely independent editorial policy that is widely respected across the world," Anthony O'Reilly said in a statement.

The group will also cut its board size to 10 members, from 17, bringing in new people close to O'Brien.

"I believe these changes represent the beginning of a new era at Independent News and Media and one that brings with it challenges which cannot be underestimated," O'Brien said in a statement.

Gavin O'Reilly said talks with lenders were moving in the right direction as the bond deadline approached. He also said sales of assets to deleverage the group were progressing well.

Asked to comment on reports the group could sell its flagship London Independent title, Gavin O'Reilly told Reuters: "Our focus is ensuring all the assets that we manage make a contribution."

He declined to comment specifically on whether he would sell the newspaper, where 90 editorial jobs have already been cut and which is moving in with the Daily Mail newspaper group to save money.

INM had also hoped to sell its Australasian radio and newspaper group APN News & Media to cuts its debt by about €800-million, but it has not found a buyer yet.

Anthony O'Reilly has built a media group spanning from the Pacific through India and South Africa to Ireland. He has also served on the boards of The Washington Post, General Electric, Mobil Corporation - now called ExxonMobil - Bankers Trust and the New York Stock Exchange.

Anthony O'Reilly, who is ranked as the highest rugby try scorer in the history of the British and Irish Lions, has also seen hundreds of millions of euros of investments disappear as Irish luxury tableware maker Waterford Wedgwood entered receivership in January. - Reuters

- IOL (www.iol.co.za) is part of the Independent News & Media group

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