A £150m bid was made for Johnston Press before it was snapped up by JPI Media in a pre-pack administration deal, a report has revealed.
The creditors report published by JP administrators Alix Partners today said the offer of between £140m and £150m by a unnamed bidder “assumed no pension plan deficit” and £10m of cash available on completion of sale.
Five other offers were made for parts of the regional publisher, including a £96m to £120m deal for the group that excluded the i newspaper.
Two separate offers were received for the i newspaper, one for £25m and the other £35m.
The final offers were one of £2.5m for the Sheffield Star, Sheffield Telegraph and Doncaster Free Press and another bid of £30,000 for the Observer series and West Sussex Gazette.
The report also revealed that the value of the Scotsman group titles has collapsed to £4.3m – a huge fall from the £160m JP spent to snap up the titles in 2005.
JP directors consulted with Alix Partners and financial advisers Rothschild and Co over the deals but “considered that none of the offers received, or any combination of them, would result in aggregate net proceeds sufficient to enable the group to repay the bonds in full”.
In the report, Alix Partners went on to flag a “significant shortfall” of cash for creditors after the regional publisher was sold to new owner JPI Media in a pre-pack deal.
It said there are funds available for distribution to secured bondholders, including those who set up JPI Media, and prescribed unsecured creditors “in accordance with priorities set by the Insolvency Act”.
A spokesperson for Alix Partners said: “We are confident that, in the circumstances, the sale achieved the best available outcome for creditors.
“We are also satisfied that the marketing process for the sale of the business and assets was appropriate and well publicised.
“The sale consideration, which resulted from the best offer received, was consistent with independent valuations carried out by Mazars and far in excess of other offers received.
“Proceeding with a swift ‘pre-pack’ had the additional advantages of mitigating disruption to the business and importantly preserving jobs across the organisation.”
JP bondholders who set up newly formed JPI Media last week – including Goldentree Asset Management, Fidelity, Caravel Asset Management and Benefit Street Partners – agreed to wipe out 60 per cent of the £220m owed to them, extend the final repayment date to 2023 and inject £35m of new money into the group as part of the pre-pack deal.
The move is said to have secured jobs and JP’s more than 200 titles.
But the defined benefit pension scheme, which has a deficit of approximately £47.2m, was not transferred to the new company – a move that could affect pension payments to 250 employees.
Earlier this week, the Pension Protection Fund, a statutory fund that acts to save the pension schemes of collapsed companies, confirmed it was putting in a £305m claim with JP’s administrators.
The PPF raised “concerns” about the pre-pack deal. In a statement released on Monday, a PPF spokesperson said: “We want to reassure members of the Johnston Press pension plan that their benefits are protected by the PPF at what must be an unsettling time for them.”
The chairman of the Work and Pensions Select Committee Frank Field also raised questions about JP’s pensions.
In a letter to Pensions Regulator chief executive Lesley Titcomb, he said he found it “difficult to understand” how JPI Media could snap up the publisher “without taking any responsibility for its pension scheme.”
Christen Ager-Hanssen, formerly the largest Johnston Press shareholder, has lashed out at the deal that chopped the value of his 25 per cent holding.
He has set up an action group website for Johnston Press pensioners and shareholders with the aim of collecting evidence for planned legal action.
Responding to the pension concerns, a JP spokesperson said: “Johnston Press has been in regular dialogue with its Pension Scheme Trustees, The Pension Regulator, and the PPF since 2014.
“Throughout our extensive and detailed discussions during the strategic review we have kept them informed every step of the way.
“Up until the administration the company met all its obligations to the scheme, with more than £55m paid in relation to the plan from the beginning of 2014.”