News late on Friday 19 October that activist investor Custos had increased its stake in Johnston Press (JPR) from 20% to 25% has helped to revive the newspaper publisher’s share price which has now nearly doubled on last week’s close to trade at 4p.
Custos accompanied its stake building with a strongly-worded statement from chief executive Christen Ager-Hanssen who says the company has ‘become a textbook case of shareholder-value destruction’.
Ager-Hanssen may not have any faith in the current board but says ‘our increased holding prove that we continue to have confidence in the underlying business’.
This underlying business encompasses a large portfolio of regional papers as well as the i. The company recently put itself up for sale in the face of a £220m repayment of high yield bonds which mature in June 2019. The company reiterated its commitment to this process in its response to Custos.
DOGGED BY DEBT
A clause written into its bond funding means that in the event of a hostile takeover, the company’s large debt would need to be repaid in full if there is a change of boardroom control.
As part of an expansionary phase in the 1990s and mid-2000s the company took on significant debts as it acquired multiple newspaper titles. Among the acquisitions were The Scotsman and its sister papers for £160m in 2005.
These borrowings became increasingly unmanageable amid dwindling circulations and declining print advertising revenues as the newspaper industry faced significant structural changes.
The bonds currently in focus were issued in 2014 as part of an effort by former chief executive Ashley Highfield to sort out the balance sheet.
