Johnston Press Set for Sale as Major Shareholder Balks

(Bloomberg) -- U.K. newspaper publisher Johnston Press Plc sold its assets Saturday to a new company controlled by its bondholders as part of a plan that drew the ire of its largest shareholder.

The company, publisher of the “i” national newspaper and 200 other titles including The Scotsman and The Yorkshire Post, completed the sale to a new entity that will be called JPIMedia, according to a statement on Saturday. JPIMedia said the deal will safeguard the company’s future.

Johnston Press Set for Sale as Major Shareholder Balks

New York-based hedge fund GoldenTree Asset Management is the largest holder of 220 million pounds ($282 million) in debt due in June, the Telegraph reported. The paper, which isn’t affiliated with publisher, said declines in revenue from print advertising left Johnston Press unable to repay and it had not been able to refinance the bonds.

Norway-based Custos Group AS, the biggest shareholder, said Saturday it “will do everything in its power” to stop the “abominable deal” that it said would turn over the company to “a greedy New York hedge fund.”

Johnston Press, originally a Scottish family printing business that moved into newspapers in 1846, made a series of debt-funded acquisitions in the early 2000s, just before the industry’s business model was gutted by the shift online of classified advertising and news.

David King, Johnston’s chief executive officer, will become CEO of JPIMedia.

As part of the transaction, bondholders agreed to trim the level of senior secured debt by 60 percent to 85 million pounds and extend the debt maturity to December 2023.

The bondholders also provided 35 million pounds in funding for the business.

‘Considerable Interest’

The company had tried to find a strategic buyer, but in a statement said that despite "considerable interest," Johnston’s board had concluded "none of the offers the Company received deliver sufficient value."

Daily Mail & General Trust Plc, the publisher of The Daily Mail, had been considering a bid for the i, several media reports suggested in the past week.

The Telegraph said that King wrote a letter to employees Friday telling that the new owners would "provide new money" and that employees would be paid normally by the new holding company.

But, according to the Telegraph, King told employees that the company’s pension plan would not transfer to the new company and that the U.K.’s Pension Protection Fund would be notified.

The Pensions Regulator has the power to block the transfer of any assets if it believes the move would harm Johnston’s pensioners, according to the Telegraph.

Norwegian investor Christen Ager-Hanssen, the Custos Group’s chief executive officer, in a statement tweeted on Saturday said Johnston’s board had refused to consider his proposals to change the board and make changes to avoid a sale.

“Their actions today, ensuring their own jobs are saved but sacrificing the pensions of their loyal staff, many of whom will no doubt also lose their jobs under the ownership of a US hedge fund, is simply a disgrace and a vulgar display of the worst elements of capitalism,” Ager-Hanssen said.

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