Johnston Press commissions AlixPartners for possible administration
With the printed press facing deflating revenues and declining readership in the UK, troubled newspaper publisher Johnston Press is preparing to hand control to its lenders as the search for a rescuer enters its final stages. In preparation for this, AlixPartners has been appointed to handle the firm’s potential insolvency.
Johnston Press is a multimedia company currently based in London, United Kingdom. Its flagship titles include national newspaper the i, The Scotsman, the Yorkshire Post, the Falkirk Herald, and The News Letter in Belfast. It operates around 200 other newspapers and associated websites around the United Kingdom and the Isle of Man.
Over the past decade, readership of leading newspapers in the UK has dwindled noticeably, with the traditional print media increasingly struggling to justify the advertising revenues which were once its life blood. In the case of Johnston Press, this has seen its properties become heavily encumbered with debt, and the company subsequently took the decision to place itself for sale in October 2018. However, the weight of its debts meant that many interested buyers declined redemptions offers.
As first reported by the Sunday Telegraph, specialist restructuring consulting firm AlixPartners has been appointed to handle a potential insolvency and pre-packaged sale of the 251-year-old publisher. Johnston Press is still seeking a buyer via the formal sale process launched last month, however, AlixPartners is understood to have been asked to prepare for the cessation of payment and the sale of the group's other assets to its creditors.
According to Sky News, Daily Mail owner DMGT is said to be readying a bid for the i newspaper, which Johnston Press bought from Evgeny Lebedev’s ESI Media for £24 million in 2016. At the same time, another option could include a solvent debt-for-equity swap; however, this would require approval from shareholders. Norwegian entrepreneur Christen Ager-Hanssen holds a quarter of these shares, and could block such a deal, or a sale of the i. These options seem unlikely, then, and while Johnston Press’ Directors are legally obliged to explore all options before calling administrators, they seem to have little room for manoeuvre.
Chief Executive David King is now reportedly seeking a solution before Christmas. AlixPartners has been involved in talks over the future of Johnston Press for over a year, but with the festive period now looming fast, moves towards a handover have accelerated. The company’s future may hinge on the fate of its pension fund, which has a £40 million deficit.
This also suggests that a pre-pack administration could well be in the cards, as it would allow a buyer to discard the least profitable aspects of the business, like the much-maligned move of Sports Direct for House of Fraser. Part of the firm’s pension scheme could then be offloaded into the Pension Protection Fund (PPF), the Government-backed lifeboat, which would mean reduced pay-outs for retirees.
