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Johnston Press Downgraded By Moody's On Print Revenue Erosion

Mon, 07th Mar 2016 12:20

LONDON (Alliance News) - Johnston Press PLC on Monday saw its ratings downgraded by Moody's Investors Service, which cited the "persistent erosion" of the publisher's print revenues from the industry shift toward digital formats.

The downgrades included the company's corporate family rating, to Caa1 from B3, and its probability of default rating to Caa1-PD from B3-PD.

Moody's also downgraded the rating of the GBP225 million senior secured notes issued by the group's subsidiary, Johnston Press Bond PLC to Caa1 from B3.

The ratings agency's outlook on all ratings is "stable".

"The company has made some progress in expanding its digital formats and has implemented cost actions to accommodate the ongoing top line pressures. Nevertheless, we expect that the industry trends will put ongoing negative pressure on the company's operating performance", said Gunjan Dixit, a Moody's Vice President and lead analyst on Johnston Press.

Dixit said that Johnston's acquisition of UK national daily newspaper i "will benefit the company's operations as it brings a growing subscriber base and is free cash flow generative".

"However the acquisition will absorb GBP22 million of cash resources in 2016 and GBP2 million in 2017. While Johnston Press has committed to sell certain non-core print assets to help restore its liquidity, it could be difficult for the company to execute asset sales at attractive prices in the tough operating environment," Dixit added.

Shares in Johnston Press were up 1.7% at 42.44 pence on Monday.

By Samuel Agini; samagini@alliancenews.com; @samuelagini