Hedge funds plot break-up and sale of i newspaper publisher | Business News
A consortium of hedge funds which seized control of Johnston Press last year is plotting a quickfire strategic review that could trigger the sale of prized newspaper assets such as the i and The Scotsman.
Sky News has learnt that the owners of JPIMedia, the company’s new name, are sounding out advisers about launching an auction of parts or all of the business, which publishes hundreds of regional titles.
Prospective advisers are understood to have been interviewed in the last few weeks, with an appointment said to be imminent.
City insiders said this weekend that the likeliest outcome was the sale of the i in one transaction, and the rest of the group in another.
The likely valuations of the regional titles, which include the Yorkshire Post, Arbroath Herald and Belfast Newsletter, is unclear but is expected to reflect the dwindling financial prospects of news outlets hurt by the shift towards online, often free, rivals.
The strategic review will be closely watched by JPIMedia’s roughly 2000 staff, who endured an anxious period last November when the company was forced to call in administrators.
A pre-pack insolvency process led to Johnston Press’s bondholders taking control of the business and immediately writing off more than £130m of debt.
The funds, which include Goldentree Asset Management, Benefit Street Partners, CarVal and Fidelity, also injected £35m of new capital into the company to put it on a more sustainable footing.
While the transaction substantially reduced JPIMedia’s borrowings, it infuriated shareholders including Christen Ager-Hanssen, an entrepreneur who held a 25% stake in the listed Johnston Press.
The Pension Protection Fund lifeboat, which took on responsibility for paying the company’s retirement scheme members, was also angry at the way the pre-pack administration was carried out.
A source close to JPIMedia’s discussions with bankers emphasised this weekend that the company had yet to make any decisions about its future, and that it was undertaking a review of options.
Nevertheless, the fact that its owners are starting to explore a disposal of the group less than six months after taking control of it will alert prospective buyers of some of its most attractive assets.
Chief among those will be the i, the most successful national newspaper title to launch in recent years.
Profitable innovation in Britain’s paid-for national newspaper market has been in short supply in recent years, with Reach, the sector’s most prolific consolidator, closing New Day, a female-focused title, in 2017 after just a few weeks of publication.
Reach – previously known as Trinity Mirror – could seek to buy some of JPIMedia’s regional titles, while The Scotsman is bound to attract interest from wealthy individuals.
Daily Mail & General Trust (DMGT) expressed an interest in the i shortly before Johnston Press went into administration and could be tempted to look again.
The title launched in 2012 as a sister newspaper to The Independent’s print edition, and was bought by Johnston Press for £24m four years later.
Alongside The Scotsman, it is the jewel in Johnston Press’s crown, and is profitable on a standalone basis.
Nevertheless, its circulation in January of nearly 234,000 copies was 9% lower than the same month in 2018.
The bondholders’ move to take control of approximately 200 regional newspapers came within weeks of Johnston Press putting itself up for sale as it sought to navigate a £220m bond which was due for repayment this year.
The financial restructuring left JPIMedia with debts of £85m.
Despite its problems, JPIMedia remains one of the biggest employers of journalists in the UK.
The company is run by Dave King, who moved from the finance director role to becoming chief executive a year ago.
He helped to oversee the emergency sale process which ended with the company’s insolvency in November.
The possible sale of the business would come in the wake of an independent review of British journalism by Dame Frances Cairncross, which concluded that the Government should explore direct funding for local news, as well as new tax reliefs to support public interest journalism.
The explosive growth of digital platforms such as Facebook and Google, the rise of ‘citizen journalism’ and increasingly bitter debates about ‘fake news’ have all cast a shadow over the fortunes of historically successful publishers.
A spokesperson for JPIMedia declined to comment.