Trinity Mirror shares rally after pension assurances

Reassurances from newspaper publisher Trinity Mirror over its trading and pension fund position have helped it recover from a sharp share price slide.

The firm’s stock was down by as much as 15 per cent today but recovered after the company said it was comfortably within debt covenants, trading in line with expectations and had no liquidity issues with any of its pension schemes.

Trinity Mirror is the UK’s largest newspaper publisher with a network of national and regional titles. Today its share price hit a low of 41.5p, down 90 per cent on a year ago when it was over 500p. It later rallied to 55p.

Trinity’s pension fund had £1.53 billion of liabilities at the end of last year, with a deficit of £125 million. There has been City speculation about the current position given the falling stock markets.

The company, which publishes more than 260 titles including the flagship Daily Mirror, issued a profits warning at the end of June saying advertising revenues were suffering a “marked” decline.

Trinity said today: “There are no liquidity issues with any of our pension schemes and deficits continue to be funded in accordance with payment schedules agreed with the trustees of the various pension schemes.

“The company does not expect any increase in pension contributions during 2008 beyond those already agreed.”

The firm said it had £425 million of net debt as at June 29 this year, and was trading comfortably within the covenants for its debt facilities.

Most of the borrowings are through a US dollar private placement, it said, with £60 million repayment due this coming October which will be funded through cash flow and a new £210 million bank facility agreed in June. There are no further repayments on the borrowings for a further three years.

Trinity added: “The company continues to be cash generative and to perform in line with expectations following the trading update issued on June 30.”

The update revealed that underlying group revenues sunk by around 7.8 per cent in the nine weeks to June 29, with underlying ad sales down around 12.6 per cent. Circulation revenues also fell in the past nine weeks, down around 2.4 per cent.

Shares in the company have fallen to less than a tenth of their value a year ago amid gloom over the advertising market.

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