Sport Media Group, owner of the Daily and Sunday Sport, has today appointed administrators who will look for a buyer for assets owned by the beleaguered business.
All 80 staff have been issued with redundancy notices following a meeting with administrators yesterday.
Dermot Power and Patrick Lannagan, business-restructuring partners at BDO LLP, were appointed joint administrators for Sport Media Group and its two wholly-owned subsidiaries Sport Newspapers Limited and Moresport Limited.
Their appointment follows two announcements on Friday from Sport Media Group, initially that it was suspending trade in its shares and then later that it had ceased publication of its titles as it was set to go into administration.
Sport Media Group, which bought the two Sport titles in 2007 for £50m, said an “insufficient recovery” had resulted after poor sales last year, leading to crisis talks with its bank, which was about to end a six month payment holiday on its debts.
Sport Media Group issued a statement to the City this morning detailing how the joint administrators would now seek a buyer for the assets of its companies, which include the newspaper titles and the group’s investments in digital content provider Netcollex and telecoms provider Telecom 2.
Both Netcollex and Telecom 2 continue to trade as normal outside of administration.
Dermot Power said: “The companies have been exploring restructuring and sale options and regrettably the cash flow problems being experienced as a result of historic trading difficulties, coupled with limited interest from third party investors or an acquirer for the businesses, have resulted in the companies ceasing to trade.
“The joint administrators are taking all necessary steps to maximise recoveries for the benefit of creditors and would welcome early contact with any interested parties.”
In September last year, Sport Media Group said the Royal Bank of Scotland had agreed to defer its monthly loan repayment of £50,000 for a period of six months to provide its necessary working capital. That agreement is now due to end.
The deferment allowed the company to return to profit as it made an underlying pre-tax profit of £330,000 in the previous six months. However, the firm has been continually constrained by debt repayments incurred from the 2007 reverse takeover by Interactive World.
Sport Media Group was bailed out in April 2009 by former owner David Sullivan and Gold Group International who agreed to a loan of £1.68m to help restructure the business. Sullivan also took a 9.9 per cent stake.
The National Union of Journalists has called for a full investigation into the collapse of the company, which it said had been performing well in recent months.