David Gilbertson, the chief executive of Emap, has offered a series of assurances about the business publisher’s prospects following the revelation 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 yesterday revealed that parent company Eden Bidco, a joint venture between private-equity firm Apax and Guardian Media Group, risked breaching its agreements with lenders should the economic climate deteriorate and Emap’s profits fall “materially below the level seen in the first half of 2009”.
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.”
Gilbertson told Press Gazette today the company was operating well within its covenants and that there was “no jeopardy” to its trading.
He said: “In practice Emap is massively profitable and more than able to meet all bank obligationsâ€¦We have more than adequate resources to meet our financing requirements.”
Gilbertson said Emap’s accounts had included a “technical statement” about possible future risks required by companies that have covenants attached to loans, he stressed that outlining future risks was “purely a technical discussion”.
He also pointed out how, despite the economic downturn, Emap’s profits in the first six months of the year were only three per cent below those achieved in the same period the previous year.
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.