Johnston Press plc Drops On Rights Issue Result

Johnston Press (LSE: JPR) — the second-largest publisher of local newspapers in the UK, whose titles include The Scotsman, the Yorkshire Post and the Falkirk Herald, plus around 250 other newspapers in the UK, Ireland and the Isle of Man — has seen its share price slip over 3% so far today, following the announcement that it  has received acceptances for the 6.52 for 1 rights issue that represent approximately 92.25% of the total number of new ordinary shares offered.

The rights issue is part of the company’s £360m capital refinancing plan, announced at the start of May, and is intended to raise  approximately £138m. A new placing of 13,676,149 shares in May raised approximately £2.3m, but the bulk of the capital has come from the issuing of bonds, which have generated approximately £220m.

Johnston Press says that it will use the proceeds of the capital refinancing plan for “accelerating the deleveraging of the group’s balance sheet” and to replace its existing lending facilities and private placement notes, so as to extend the group’s financing arrangements to the 2018 financial year and beyond.

The capital refinancing plan is a key element in the company’s ability to implement its “Future Strategy”, unveiled in 2012, under which it aims to continue building overall audiences, grow its digital operations substantially, return to revenue growth, maintain cost control, grow profitability, and focus on cash generation.

Commenting on the capital refinancing plan, CEO Ashley Highfield said:

“Johnston Press has already achieved much in turning around our business performance, with 2013 marking a return to underlying operating profit growth for the first time in seven years. 

“The Board considers that the successful implementation of the Future Strategy, in combination with the implementation of the Capital Refinancing Plan, will provide a platform from which the Group can return to overall revenue growth and generate increased surplus cash flow with a view to further deleveraging the Group and re-investing some of that surplus cash to grow its digital presence further.“

Shareholders will certainly be hoping that the company’s board can deliver, as it’s been a terrible year so far for Johnston Press — now standing at just 4p, its share price has plummeted 85% since a high of 29p in February 2014, due almost entirely to the announcement of the refinancing plans at the start of May and the effects of the admission to trading of the new placing at the end of May.