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Markets News Afternoon: Independent News & Media says restructuring talks have "advanced significantly"; European Commission supports Dell aid in Poland
By Finfacts Team
Sep 23, 2009 - 4:54:53 PM
Independent News & Media said today that talks with its bondholders and banks on a restructuring of its debt have "advanced significantly."
INM has a €200m bond which has been overdue for repayment since May.
INM said in line with its objective of pursuing a consensual financial restructuring which balances the rights of , and preserves value for, all stakeholders, the outcome of the restructuring discussions with lenders and the holders of the Bonds is likely to include:
a significant extension on maturities of available senior debt facilities;
other modifications to senior debt facility terms, including revised financial covenants to provide adequate headroom accommodating prevailing trading conditions and expectations;
an equitisation of an amount of the bond claim providing bondholders with an equity interest in the enlarged issued share capital, in line with that which is now being referred to in media reports; and
a subsequent rights issue at a rights price of €0.05, providing existing INM shareholders the opportunity to participate in the capital restructuring at an attractive price.
This assumes no other viable proposals are advanced by lenders or the bonds.
INM said it believes that a successful outcome to the restructuring discussions along these lines will provide INM with a capital structure that gives it suitable time and space to restore equity value and optimally position the business for growth. Assuming a successful conclusion and implementation of this restructuring, INM will achieve a significant reduction in net debt (the combination of the equitisation of the bonds, the rights issue and the group’s previously-announced disposal programme resulting in deleveraging of approximately €350 million, with further debt reduction anticipated in 2010), increased liquidity and a stabilised financial position.
"Nobody is in any doubt that the banking system in Ireland is badly broken," Dan O'Brien from the Economist Intelligence Unit told CNBC Wednesday. "It's an old-fashioned property bubble, but it's big and the banks are broken"
INM said with economic fundamentals expected to recover over the medium-term, INM’s market-leading assets are very well positioned to benefit from any cyclical economic recovery. The company’s strong operating leverage, as a result of significant operating cost reductions over the past 2 years and continuing business process improvements, should facilitate incremental revenue growth substantially translating into a much improved operating profit performance.
It was reported earlier that a meeting was being held in Dublin today between representatives of businessman Denis O'Brien and a group of bondholders and banks owed money by INM.
It is understood that O'Brien's representatives were presenting an alternative plan to the one currently being prepared by the management of INM to resolve the group's debts to bondholders.
O'Brien owns a 26% stake in the group. His alternative plan involves an investment by him of €100m and a cash payment to bondholders.
Dell Poland
The European Commission today approved state aid of €54.5m given to Dell in respect of building a computer plant in Poland.
The Commission said the aid was compatible with its rules, despite objections from Ireland, where Dell is closing its first European factory in Limerick.
The Polish plant, located in the unemployment-hit central city of Lodz, is to employ up to 3,000 people to produce desktops, notebooks and servers.
"Our assessment shows that the project's contribution to regional development and job creation in a disadvantaged region of Poland outweighs any potential negative effects,"EU Competition Commissioner Neelie Kroes said in a statement.
"For cases like this, which could present a high risk of distorting competition and where job losses in other member states have been pointed to, we need to conduct a detailed economic analysis of the market and of the impact of the aid before taking a decision,"she added.
The Commission said its investigation had shown that job losses in Ireland would not be a consequence of the aid granted by the Polish authorities to the Lodz factory.
Last week, the Commission approved cash aid to Ireland from a globalisation fund:
The Wall Street Journal reports that in the strongest indication yet that confidence is returning to the real-estate sector, U.K. property companies announced plans Wednesday to raise more than £1 billion ($1.64 billion) to strengthen their balance sheets.
House builders Barratt Developments PLC and Redrow PLC disclosed plans to raise more than £900 million through rights issues and placements, while Liberty International PLC -- the country's largest industrial real-estate investment trust -- said it would raise about £310 million through an issue of new shares.
The capital increases are the latest in a burgeoning trend that has seen similar moves earlier this year by house builders Taylor Wimpey PLC, Bovis Homes Group PLC, Berkeley Group Holdings PLC and Bellway PLC.
John Engler, president of the National Association of Manufacturers, says US manufacturing will generate 1 million new jobs by 2014, but he's not holding his breath for green jobs.
US markets
In New York, stocks were steady Wednesday as investors awaited news from the Federal Reserve's interest-rate committee.
The Dow Jones was off 0.1%.
The S&P 500 was down 0.06% and the Nasdaq was off 0.21%.
European stocks erased their gains as energy companies fell after a US government report showed an unexpected increase in oil inventories.
The Dow Jones Stoxx 600 Index rose 0.11% Wednesday.
In Dublin, the ISEQ rose 0.45%.
INM rose 7% and AIB is up 4.6%.
Iceland
Bloomberg reports today that Iceland’s banks, which collapsed a year ago after racking up $80 billion of debt, didn’t violate any regulations, President Olafur R. Grimsson said, even as the country’s financial regulator investigates the industry.
“Whatever you say about the Icelandic banks, they operated within the framework of the European regulations on banking and finance,”Grimsson, who is the country’s head of state and doesn’t lead the government, said in an interview with Bloomberg radio in New York today.
The failure of the island’s three biggest banks in October left Iceland’s economy in tatters and in need of an international bailout to stay afloat. The Financial Supervisory Authority has identified 20 potential cases of banking malpractice and is probing a further 20, Chief Executive Officer Gunnar Andersen said last month.
Interview and discussion with the President of Iceland, Olafur Ragnar Grimsson talking about Iceland's economy and he says Iceland is now re-directing the economy:
On the New York Mercantile Exchange, oil for November delivery is trading at $68.87 down $2.89 from Tuesday's close. In London, Brent crude for November delivery is trading at $68.00 a barrel.
The euro is trading late afternoon Tuesday, at $1.4752 and at £0.8994.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
