LONDON (Alliance News) - Johnston Press PLC Friday unveiled a GBP360 million capital restructuring plan aimed at paying down debt and putting it on a more stable financial footing, and said its revenue decline had slowed in the first 17 weeks of the year as advertising markets continued to stabilise.
The publisher of regional newspapers including The Scotsman and The Yorkshire Post said it plans to raise about GBP2.3 million in a placing of 13.7 million shares at 17.0 pence each with British Sky Broadcasting PLC, about GBP137.7 million in a rights issue, and about GBP220 million by issuing senior secured fixed rate bonds that will mature in 2019. It will also get a new GBP25 million revolving credit facility expected to mature in 2018, and modify funding arrangements and the schedule of contributions to its pension fund.
The publisher, which owns over 200 newspaper titles in total, has been struggling in recent years as advertisers have reduced their spending on adverts in traditional newspapers. It's a phenomenon that has affected the industry as a whole, but local newspapers have been among the worst affected. Like peers, Johnston Press is moving to a more digital strategy, but needed to sort out its debt-burdened balance sheet.
It built up a debt pile making acquisitions in the 1990s and early 2000s. Its net debt was GBP302.0 million at the end of its 2013 financial year.
In a statement, the company said the capital restructuring "will provide a platform from which the group can return to overall revenue growth and generate increased surplus cash flow with a view to further deleveraging the group and re-investing some of that surplus cash to grow its digital presence further".
BSkyB's involvement in Johnston Press's capital restructuring comes as the companies announced a deal allowing Johnston Press to use Sky's AdSmart product, which tailors advertising based on a customer's details, like locality.
Under the terms of the agreement, Sky will make its AdSmart local product available to parts of Johnston Press' sales network, meaning they can use it to work with advertisers to create campaigns for the company's regional print titles and digital platforms.
In a separate statement, Johnston Press said adjusted revenue was down by a mid-single digit in the 17 weeks to April 26 compared with a year earlier, an improvement on the 5.5% decline it reported for its 2013 financial year as a whole.
It said digital revenue had continue to grow in line with the rate it recorded in the second half of 2013, circulation revenue continued to decline at broadly the same rate as in 2013, while print advertising revenue declines had slowed "in an increasingly stable advertising market".
Johnston said the cost cutting it has planned for 2014 remains on track.
Its online audience grew to 15.9 million unique users in March, up 42% on the year. Its mobile offering hit 6.4 million monthly unique users, it said.
"Although the economic outlook is not without challenges, the group continues to see momentum in the business, underpinned by the re-structuring and re-focusing of the business and an increasingly stable advertising market," it said in a statement.
Johnston Press shares were down 25% at 18 pence early Friday, the biggest decline on the London market.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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