Johnston Press has announced a deal to defer repaying its £300 million debt after resetting its financial covenants.
The deal has seen loans due to be repaid over the next twelve months have been “reset” to September 2015.
The temporary measure has given the company time to negotiate with banks to secure a longer-term refinancing deal.
The Times reports that shares in the company rose by 16p following the announcement.
Johnston Press has hired investment bank Rothschild to advise them on the debt-restructuring bid.
On 2 December the company announced it was in talks to sell its Irish division for £7.2 million.
Commenting on the deal, Johnston Press chief executive Ashley Highfield said: “I am pleased with the ongoing support shown by our lender group in providing a clear path for the continued pursuit of our operational strategy, which has shown very encouraging developments in 2013.
“We plan to refinance the group in 2014 and will continue to work closely with our lenders and their financial advisers.”
If the Irish deal is successful, Johnston Press will have lost more than £150 million on the expansion plan.
Full copy of the announcement:
Johnston Press plc ("Johnston Press" or "the Group"), one of the leading community media groups in the British Isles, announces that it has reset its financial covenants through to the maturity of its debt facilities in September 2015 and intends to pursue a refinancing of these debt facilities in 2014.Operational strategy progressing wellAs highlighted in the Interim Management Statement issued in November 2013, the Group continues to make significant progress with the implementation of its operational strategy. This is focused on growing the overall audience through the re-launch of its print titles and investing in new digital products across all platforms, returning to top line growth through the acceleration of digital revenue growth and mitigation of print advertising decline, whilst continuing to control costs and dispose of non-core assets.This progress has been reflected in the Group's financial performance, with like for like operating profit increasing by 4.3% in the six months to June 2013, the first such increase in seven years, and by 7.8% in the 18 weeks to October 2013.A further trading update will be provided in March 2014 along with the Company's full year results for 2013.Resetting of financial covenants and intended refinancing in 2014The Company and its lenders have agreed to reset its financial covenants until September 2015, providing the Company with a stable financial platform from which to pursue a full refinancing in 2014. Discussions in relation to the refinancing are expected to commence in the new year and a further update will be provided in due course. Rothschild is advising the Company.Commenting on the intended refinancing, Johnston Press CEO Ashley Highfield said:"I am pleased with the ongoing support shown by our lender group in providing a clear path for the continued pursuit of our operational strategy, which has shown very encouraging developments in 2013. We plan to refinance the Group in 2014 and will continue to work closely with our lenders and their financial advisers for that process. A stable medium-term capital structure will support the acceleration of our digital growth strategy and would expedite the projected return to overall top line growth."