Independent News and Media chief executive Gavin O’Reilly has won board support for his debt restructuring proposals after directors rejected a rival plan from rebel investor Denis O’Brien.
The deal is a victory for Sir Anthony O’Reilly, father of Gavin and the company’s largest shareholder, in his battle for control of INM with rebel O’Brien, whose 26 per cent stake makes him the second biggest shareholder.
It is also likely to secure the future of the company’s London-based Independent titles, as the O’Reillys have pledged to keep the loss-making newspapers running.
Under the new deal bondholders owed â‚¬200m by INM will take a 46 per cent stake in the company, which spurned an alternative deal from O’Brien’s that would have seen him take a 67 per cent stake in the business in exchange for an injection of â‚¬100m.
The deal agreed late last night will lead to a â‚¬350m reduction in INM’s debt by giving equity to bondholders, through a rights issue and sell-offs.
The company claimed last night that the deal ‘allows for the restoration of the INM Group to a position of financial stability.’
Under the deal â‚¬123m of outstanding bond debt will be exchanged with the bondholders for a 46 per cent stake in the business.
Both O’Brien and his long-time rival Sir Anthony O’Reilly will see their interest in INM significantly diluted. Existing shareholders will have to reduce their stake in the business by nearly half to allow the bond debt swap, but they will have the chance to buy back â‚¬94m in shares at a rights issue price of five cents.
This would give existing shareholders the chance to regain 52 per cent of the business.
The deal will also see â‚¬150m raised by selling off assets including South African advertising business INM outdoor. A move which was originally opposed by O’Brien.
Gavin O’Reilly, INM chief executive, said: “After intensive negotiations over a number of months, the company is pleased to be able to announce that an outline restructuring has been agreed in principle with the Ad Hoc committee of bondholders, which also has the broad support of our banks.
“We now expect that all parties will move towards implementation of the restructuring without delay, including procuring necessary consents and approvals.
“With economic fundamentals expected to recover over the medium-term, INM’s market-leading assets, restructured balance sheet and improved financial situation leave the company very well positioned to benefit from any cyclical economic recovery.”
In March O’Brien agreed to end his long feud with the O’Reilly family and look for a deal to secure the future of the business, but the ceasefire fell apart over the summer as O’Brien disagreed with INM over how it should shape itself in the restructure.
O’Brien made a series of demands, including the immediate sale or closure of the Independent and Independent on Sunday, which were dismissed by the board of INM as they looked at alternative plans.