Future of Independent newspaper in doubt

The Independent newspaper faces an uncertain future after its owner Independent News & Media (INM) failed to reach agreement with bondholders over a €200m bond. It said there was a strong chance it would breach its financial covenants unless a deal could be reached by May 18.

The warning came on the heels of the announcement of the group’s twice-delayed 2008 results, which saw it make a €161.4m loss for the year. Advertising revenues fell by 3.8 per cent, while circulation revenues rose only slightly.

INM has total debts of €1.3bn and although it has indicated it is still confident of reaching a solution on its funding, the lack of agreement focused the market's attention on the possible sale of the Independent and Independent on Sunday.

So far the group has decided on selling its 18 per cent stake in online bingo operator Cashcade and stakes in German website Verivox and INM Outdoor in South Africa.

The newspaper group said that last year’s loss was mainly down to an 'exceptional charge' of €373.1m, most of which came as it wrote down the value of its newspaper assets as a result of the economic crisis.

Major shareholder Denis O'Brien said "Management needs to remain focused on eliminating loss-making businesses and all stakeholders need to work together to ensure that value is protected."

WHAT THEY ARE SAYING
Lex, FT: "The stand-off between Independent News & Media, its banks and bondholders could end messily. IN&M cannot raise new debt to fund a €200m, 5.75 per cent bond maturing on May 18. In spite of twice delaying its results, IN&M on Thursday filed accounts in which PwC, its own auditors, raised doubts over the Irish group’s ability to continue as a going concern. It will be a miracle if the group doesn’t fail next month's net debt to earnings before interest, tax, depreciation and amortisation covenant test."

Dan Sabbagh, the Times: "Those familiar with the situation said that there had been tentative discussions with Daily Mail and General Trust about the owner of the Daily Mail taking over. These did not get very far, although one source said that 'if the company got offered £1 for the newspaper, they’d bite their hand off'. However, DMGT has repeatedly denied interest in the Independent, even though the left-leaning daily will share a building with the Mail and Alexander Lebedev's Evening Standard from next month." ·