Independent News & Media has poured cold water on new demands by dissident shareholder, Denis O’Brien, for the company to consider the sale or closure of its loss-making papers, the Independent and Independent on Sunday.
The company issued a statement this afternoon in response to a request by O’Brien, INM’s second biggest shareholder, to hold an extraordinary general meeting to consider bringing about the immediate sale or closure of its loss-making papers, along with a range of other cost saving measures.
The company outlined how O’Brien’s request would result in “significant costs” at a time when the financially troubled firm was attempting to restructure its business.
INM said: “The board’s priority is to progress, in a timely and orderly fashion, towards a final and lasting resolution of the group’s financial restructuring for the benefit of all stakeholders.
“While the company is fully aware of Mr O’Brien’s personal views on a number of matters, as a result of press interviews conducted by him, it notes that a number of the resolutions proposed by Mr O’Brien for consideration are at variance with decisions previously taken by the board of INM.
“It is difficult to see how Mr O’Brien’s actions assist in the resolution of the financial restructuring, which the board believes is in the best interests of the company and its stakeholders.”
Chief executive Gavin O’Reilly, son of largest shareholder Anthony O’Reilly, has consistently ruled out selling the London-based papers, claiming last week they could break even by the end of 2010 as he hit out at the steady drip of press speculation that the titles could be offloaded.
The board of INM said today “an immediate closure of these titles would carry significant guaranteed contractual costs” at a time when the company is trying to reduce its losses.
The costs would include extracting the business from a service agreement with Daily Mail & General Trust to share its London offices.
INM said O’Brien’s objection to the planned sale of INM’s South African advertising business and his desire to see a detailed schedule of all board member expenses since January 2000 were all also at odds with decisions previously taken by the board.
Acknowledging receipt of O’Brien’s request this afternoon, INM said it had seen ‘solid progress’ in the de-leveraging strategy agreed by the board and constructive discussions with its financial stakeholders.
The company, which has debts of â‚¬1.3bn, has been locked in talks with its banks and bondholders for months over the refinancing of the business.
According to reports last week, bondholders, who are owed â‚¬200m, are keen to action a debt for equity swap that could see them take control of the business.
In addition to the closure or immediate sale of its London titles, O’Brien had claimed he wanted an annual payment of â‚¬300,000 made to Anthony O’Reilly, father of Gavin and former chief executive who stood down in May, for his role as President Emeritus of the company, halted with “with immediate effect”.
The company replied saying it had no contractual obligations to Sir Anthony with regard to his role of President Emeritus and no payments had been made to him in this regard.
INM also acknowledged the request for it to consider removal of Brian Hillery as chairman and the appointment of a new senior independent director in place of Baroness Margaret Jay.
However, it noted that both appointments were previously unanimously approved by the INM board.
The company added: “It is noted that Mr O’Brien has unilaterally chosen to issue a statement this morning in advance of formal consideration of his request by the board of INM, which, as he has already been advised, has already been convened.”