Johnston Press raises £212m as ads plummet
Local newspaper publisher Johnston Press is to raise £212m through a deep discount right issue and share subscription by Malaysian group Usaha Tegas after a slump in advertising revenues in the past four months.
Total advertising revenues for the 17 weeks to 26 April 2008 were 5.7% down on the same period in the prior year, but the position deteriorated as the period wore on, Johnston says, and if it continued it could mean a breach of its financial covenants.
For the 17 weeks to 26 April the overall decline, like-for-like, in advertising revenues was 7.1%. Over the period there were declines in property of 12.1%, motors of 16.4% and employment of 5.3%. Print advertising was down by 9.1% whilst digital advertising grew by 56.8%.
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Johnston is also writing off £55m for impairment to reflect the deterioration in advertising trends predominately on recent acquisitions.
"Net debt at 26 April 2008 was £700m. Given the recent reduction in consumer confidence, and deteriorating economic forecasts, the board believes that the prudent action is to raise equity capital in order to reduce debt," it said.
Terms of the issue are 1 for 1 at 53p with Usaha Tegas, the vehicle of Sri Lankan businessman Ananda Krishnan, subscribing for £43m worth of shares. Usha Tegas stake will rise to 20% including sales to the group by Johnston family members.
