Doubts over Emap as it battles with debt

Emap, the debt-heavy business publisher behind Broadcast, Drapers and the Nursing Times, has warned that failure to renegotiate its banking covenants could place “significant doubt” on its future.

Accounts released for Emap for the 12 months to the end of March reveal that parent company Eden Bidco, a joint venture between private-equity firm Apax and Guardian Media Group, risks breaching its agreements with lenders should the ecconomic climate deteriorate and Emap’s profits fall “materially below the level seen in the first half of 2009”.

Pre-tax profits were £34 million in the year to March and the covenants are “dependent upon growth” in future profits.

According to Emap’s accounts, the business faces a “material uncertainty which may require the intermediate parent company undertaking to revisit its covenants with its lenders and, if necessary, re-set its covenants which will also impact the company.”

The accounts said directors believed the company could continue to meet its covenants but that a “failure to agree a revision may cast significant doubt about the entity’s ability to continue as a going concern.”

Cayman Islands-based Eden Bidco is in talks with lenders including HSBC and Royal Bank of Scotland about relaxing covenants on £700m worth of debt.

Apax and GMG paid almost £1.1 billion to buy Emap in March 2008. Just 12 months later, Apax wrote down the value of its £300m investment to zero because of the recession.

A spokesman for Emap told the Evening Standard the company’s owners have “great confidence” in the business, adding that it was “operating fully within its existing banking covenants” although “it is prudent for management to keep financing under review”.

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