Press on regardless

Johnston Press (JPR) used to have a big private investor following. Nowadays, at 9.5p, it is capitalised at a trivial £10 million. But that conceals a huge £220 million debt problem which must be settled next year on or before 1st June 2019. Can they do it?

I for one do not know the answer to this question but I am beginning to think that there is a fair chance that they can. My basic reason is that JPR is making money and that therefore bondholders may be prepared to switch to equity to get back what they can.


The likely alternative is liquidation which means the loss of perhaps £500 million of tax losses and liquidation expenses* of the order of £10 million (my guess). These two factors alone surely justify going for the debt-for-equity swap even if it sticks in the craw for bondholders in effect rescuing ordinary shareholders. I leave aside holders of preference shares where intriguingly the board has stated its intention to pay arrears of preference dividend even though there is no legal obligation to do so – presumably because not paying the preference dividend might affect other covenants and agreements.

On Tuesday the results for calendar 2017 emerged. Central to its hopes is the online version of the Independent, known as the “i” – the hard copy of the Independent has fallen away.

The CEO, one Ashley Highfield, freely acknowledges the problems and has to keep all parties – advertisers, readers, and, above all, debt holders – happy.

The “i” is a high-quality product – just try it (inews.co.uk). And stay ahead of its advertising figures. I think bondholders might be pleasantly surprised in relation to where they are now.

It would be nice if one were able to see a trail of bargain prices actually recorded for both the bonds and the preference shares. I’ll contact the company and ask. 

_{* Incidentally, there are ways of retaining the tax losses through hivedown. But the benefiting vehicle would have no quote. So that option does not appeal. Over to Rothschild and Ashurst (for a fee of course).}