Johnston Press has said it is likely to breach its bank lending agreements after it called off the sale of its Irish newspaper business.
The publisher confirmed this morning that although there had been “considerable interest” in the Irish titles, which include the Leinster Leader, it decided the prices offered were not high enough.
As a result, Johnston Press is now in “constructive and supportive” talks with its lenders to get a relaxation of its current debt repayments. It said it hoped to have fully refinanced its £450m debts by the end of August.
In a trading update today, the company said advertising revenue in the 19 weeks to 9 May was down 34.4 per cent year on year but there had been “greater stability” in recent weeks.
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The company said it was on track to reduce costs by £30m this year. But these cost savings were not enough to offset the fall in advertising revenues, and the 2009 operating profit was likely to be “towards the lower end of expectations”.
The new Johnston Press chief executive John Fry, who took over from Tim Bowdler in January, said: “While our market remains fragile, we have seen some stability in advertising revenue over recent weeks.
“Our cost reduction programme is on track, and we are making good progress in the discussions with our debt providers.
“This gives us encouragement that we will be well placed to benefit from any recovery in the economy as and when it emerges.”
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