INM REFUSES O'BRIEN'S OFFER - Details of a refinancing deal between Independent News and Media and its bondholders were agreed last night. The deal, which would see investors keeping just over half of their existing stakes, includes a debt for equity swap with bondholders and a rights issue. A disposal programme would also go ahead. The equity issue needs bondholder support, and the rights issue needs to be passed by shareholders at an EGM. The board considered other proposals, including an offer of a €100m investment from shareholder Denis O'Brien, which would have given him a two thirds stake in the company. He is already the group's second biggest shareholder, with just over 26% of the group's shares. He also has three representatives at board level. A statement from Independent News and Media said Mr O'Brien's offer raised 'significant competition law and media plurality issues'.
Michael Foley, from the Dublin Institute of Technology's School of Media, says the outcome from the board meeting is being seen as a major win for the O'Reillys. He says that while it reduces the overall shareholding of both the O'Reilly family and Denis O'Brien, it would appear that if the O'Reillys invest further in the company they would retain their shareholding. Mr O'Brien could also invest in INM to retain his shareholding, but he has stated already that he does not want to invest any more money unless he gets control of the company. Mr Foley says that in reality, this will mean the status quo will remain. He says that in Denis O'Brien's case, he has invested a lot of money in a company which he has failed to gain control of - at this stage at least.
The lecturer says last night's agreement will boost shareholder value, and will reduce the company's indebtedness. He says there was a fear that INM would go into examinership and if the deal goes through, this fear is removed. He says it also means that the O'Reillys can sell off the South African advertising firm as they had wanted to do. Whether the London Independent is safe remains to be seen, he adds.
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SFA CALLS FOR GOVERNMENT BACKED LOAN GUARANTEE SCHEME FOR SMALL FIRMS - The Small Firms Association says NAMA is not enough to get small firms through the current tough environment. It wants a Government backed loan guarantee scheme for small business. The association holds its annual conference today.
SFA director Patricia Callan says such a Government-backed scheme has been introduced in almost every other OECD country and Ireland is lagging behind the European trend. Under such a scheme, the banks would give groups of loans to the Government, which also share the risk. She says the risk could be any percentage, but would normally be about 50%. Ms Callan says that because the risk is directly shared with the Government, the banks meet their own risk criteria. She claims it is the only way to get banks lending again to small businesses. All of the proposals currently on the table - including NAMA - will not do this, because the banks will concentrate on shoring up their own balance sheets and making sure their own positions in the markets are secure, she adds.
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MORNING BRIEFS - The dollar's reign as the world reserve currency could be nearing its end according to the president of the World Bank Robert Zoelick, who says its status could be tested by the Chinese yuan and the euro. He says it Is now time for economic decision making to be shared between developing countries like India and China, and the older powers.
*** A report just published by Davy predicts Irish economic growth of 4% in two years time. Economist Rossa White says construction activity will shrink until 2011, with unemployment peaking at over 13% towards the end of 2010 and that the recession will officially end in the first three months of next year.
