Johnston Press, publisher of the i paper and The Scotsman, and a number of regional newspapers including the Yorkshire Post, has put itself up for sale after struggling to refinance £220m in debt.
Press Gazette reported in July that the company’s share price had fallen to 3p amid market concerns it would not be able to renegotiate its debt, which is due for repayment in June next year.
Today it announced a formal sale process after “exploring all options” in repaying the debt, which includes a pension fund deficit, as part of a strategic review launched in March last year.
Johnston Press said no offers or approaches had been made as it went up for sale. The company is said to have a market value of £3m. Interested parties are asked to contact advisors Rothschild.
Press Gazette understands staff were told of the sale in an email only after the announcement had been issued to the market, as per stock exchange guidelines, but many learnt of it from news reports this morning.
In a message to staff from Johnston Press chief executive David King, seen by Press Gazette, the company was said to be “officially for sale and looking for a suitable buyer”.
But King, who replaced Ashley Highfield in May, said it was “business as usual” until a buyer is found. Staff have also been told that there will be no changes to the day-to-day running of the business.
He said: “A sale to a suitable buyer is one of the options available to us as we explore ways to repay our debts and deal with our pension fund deficit. However, there is no certainty that a firm offer will emerge from this process.
“This process is about securing a positive future for Johnston Press. In the meantime, it is business as usual. Johnston Press is a strong and resilient business with good profits and strong profit margins, great people and prestigious titles.”
King added: “I know that today’s news will be unsettling for everyone, even for those of you who had perhaps been expecting an announcement of this kind.
“Our intention is that a short period of uncertainty will put an end to the longer-term uncertainty we have all felt over the past few years.”
In interim financial results for the first half of 2018, Johnston Press reported revenue down 8 per cent to £93m and made a profit before tax of £7.1m for the period, up 6 per cent.
In 2017, Johnston Press made £14.2m profit before tax on revenues of £201m and earnings (EBITDA) of £40.1m – all of which fell year on year.
Among Johnston Press’ regional titles are dailies the Yorkshire Evening Post, Sheffield Star, Sunderland Echo, Belfast News Letter, The News in Portsmouth, and the Wigan Evening Post.
Johnston Press bought the i paper from Independent and Evening Standard owner ESI Media in April 2016. The title made £6m in earnings in the first-half of 2018, up 60 per cent year-on-year. Its success has helped offset group-wide revenue decline.
Staff were also sent an FAQ document about the sale process that said the company’s priority was “protecting the value in the business, and that means protecting the titles and jobs that exist within Johnston Press…”.
It added: “The better we perform, the stronger we will be on the other side of this process, so please make every effort to make us the best we can be.”
A Johnston Press editor told Press Gazette today’s announcement was not a surprise, but was nonetheless “depressing and disheartening”.
“Ultimately we’ve all seen this coming for some time,” they said.
“It’s a consequence of the various bad decisions made by the people who run Johnston Press over several years, from the unprofitable newspapers in Ireland that John Fry decided to buy, to the spiralling debts that Ashley Highfield delivered for his £3m a year pay packet.
“It is classic JP of course that we’ve read about this elsewhere before we got any announcement from the company.
“Equally it’s typical of the company that the FAQs they sent to employees are made up of 20 questions yet don’t address what this will mean for staff until question ten.
“Hopefully we’ll still have jobs at the end of this. Hopefully our pensions won’t be hammered. And no doubt the likes of Highfield, Fry and King won’t find it hurts their pensions and pay packets one iota.”
The sale process is being overseen by independent body The Takeover Panel, with initial expressions of interest to be considered over the next four to six weeks.
Johnston Press was recently contacted by its largest shareholder, entrepreneur Christen Ager-Hanssen who owns Sweden’s equivalent to the Metro newspaper, about its plans to tackle the debt.
Ager-Hanssen owns a 20 per cent stake in the 250-year-old publisher through his private equity firm Custos Equity.
A Johnston Press spokesperson said at the time: “If Mr Ager Hanssen does have a workable proposal to refinance the business, we look forward to receiving this and we will invite him to provide more detail.”
A bid from former Scottish First Minister Alex Salmond for the publisher, which owns several Scottish newspapers, was previously rejected.