Publishing giant Johnston Press is planning to buy back large amounts of its own debt at a discount to hold off future financial difficulty, the Telegraph has claimed.
The paper said Johnston Press, which publishes national daily the i as well as close to 200 regional titles, is making the move to allay fears it will struggle to repay £220m in bonds due in 2019.
The report, by chief business correspondent Christopher Williams, claims data from financial information firm Markit shows Johnston Press’ bonds are trading at a discount of about 40 pence in the pound.
It quotes sources as saying the sale of local newspapers outside Johnston Press’ “core business” to rival publishers could raise as much as £40m that could be used to buy back debt.
Williams said: “It can be controversial for companies to buy back their own bonds at a discount, which can have a negative impact on credit ratings, but sources said Johnston Press urgently needs to bring down its debt pile to be able to refinance, as pressure on earnings continues.”
A spokesperson for Johnston Press said the story was “speculative” and they would not be making a comment.
In August, Johnston Press reported profit down £4m in the first six months of the year to £22m.
Revenue was down by just over £10m to £113.9m compared with the first half of 2015. But cost cuts of £8.6m compared with a year earlier ensured that the profit drop was not more severe.
A write down in the value of the group’s assets meant that it officially made a before-tax loss of £184m in the period.
The company’s stock prices have fallen steadily since May. It recorded a high of 47p per ordinary stock over the six-months to date, with stocks down to 10.56p at the time of writing.
The group agreed the sale of its newspaper titles on the Isle of Man for £4.25m in July and it said it is “actively exploring opportunities for the disposal of further assets”.
Last week it was announced the publisher would close three weekly newspapers in Yorkshire: the Beverley Guardian, Malton and Pickering Mercury and the Driffield Times & Post.
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