INM PROFITS FALL AS IT FAILS TO MEET BOND DEBT - Independent News and Media says it has not been able to raise new debt to fund the maturity of its €200m, 5.75% bond, which is due to mature on May 18. It is looking for an extension beyond that date and says that unless its lenders change or amend its borrowing facilities, the group warns it will breach its financial covenants this year. In its results statement this morning, it says it has appointed advisors Rothschild and Davy, and is in talks with its bondholders, banks and major shareholders Tony O'Reilly and Denis O'Brien. It is thought that they are ready to put some of their own cash into the group.
The results for 2008 show that INM's operating profit was €290m last year, a fall of almost 17% compared to the year before. Revenue fell by almost 12% to €1.47 billion. The group itself says this performance was resilient, and that it outperformed its peers. In 2008 it made a loss per share of 19.9 cent. That compares to earnings per share of 14.6 per cent the year before. It also says that so far this year that trading has been tougher than expected.
Recently, Independent's board bowed to pressure from major shareholder Denis O'Brien, effectively bringing to a close years of unseemly squabble, dating from a battle for Eircom. O'Reilly agreed to step down as chief executive, a role that is being assumed in May by his son Gavin O'Reilly. The board has been reduced in size and some of O'Brien's closest business allies now have positions at the table.
No board member at the group was available to talk to us this morning, but The Guardian's media analyst Roy Greenslade says the results are roughly in line with what had been expected. He says the figures are actually better than those emerging from some US media companies but worse than some UK media firms and in line with the current recessionary predictions. He says that no business is in a position to forecast 2009 yet, because the recession has been biting far harder than anyone had expected. He said that while people might speak of green shoots of recovery, in media terms, there is as yet no sign of an advertising recovery. He notes that INM did quite well on sales, but he says that the next six to nine months are absolutely crucial for all media companies and especially one which is facing other kinds of problems, including the repayment of its bond debt.
The London-based analyst says that according to Denis O'Brien, talks with INM's bondholders are not going well. He says this is a genuine problem for the company and says that despite its great success over the past 20 years, shows just how difficult it is to cope with the problem of debt. He says that any company that went on an acquisition trail, financed by debt, is now suffering. This is especially true for media companies, he states.
***
MORNING BRIEFS - Exploration company Petroceltic says it has raised $40m through a share placing with new and existing shareholders. It works on projects in North Africa and the Mediterranean, and says its losses for the year rose to $3.7m. Some of this was down to euro/dollar currency fluctuations. But revenues jumped 75% to $962,000 due to higher gas prices.
*** The Massachusetts' top securities regulator has started an investigation into whether State Street Corporation, one the world's biggest institutional money managers, misled pension funds over the risk level of certain investments. A spokesman for Massachusetts Secretary of State William Galvin said the regulator is investigating State Street over certain investment products, like its 'enhanced index' bond fund. He said the fund was marketed as a safe investment to pension funds and retirement plans even though it held many derivatives, swaps, and other securities. These were 'potentially inappropriate' for the funds' mission, he said.
*** Last night the US Federal Reserve kept short term interest rates at a historic low near zero. But in its statement the bank gave an upbeat but cautious view of the economy. The Fed said that 'although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time.'
*** On the currency markets the euro is trading at $1.3282 cents and 89.72 pence sterling.
