Johnston Press plans to raise £250 million
By Erina Lin, Wednesday 14 May 2008 at 16:20 :: Management :: #1659 :: rss
British regional newspaper group Johnston Press unveiled plans to raise more than £250 million to fight against falling advertising revenues, partly through issuing new cut-price shares, the Guardian reported Wednesday.
The publisher, which owns more than 300 regional and local papers, including the Scotsman, the Yorkshire Post and the Sheffield Star, hopes to raise £212.3 million through a deeply discounted rights issue.
The Group is also bringing in another £42.7 million by selling 31.5 million new shares at full price to Malaysian investment firm Usaha Tegas, the Guardian reported.
The Malaysian company will take a 20 percent stake in the press group through this transaction and by buying other shares from the trusts owned by the Johnston family. The family's total holdings will be dropped from 19.5 percent to 7.6 percent as a result.
Shares in Johnston declined 13 percent Wednesday morning to 118.25 pennies, valuing the company at about £340 million, merely 25 percent of its worth one year ago.
Under the rights issue, Johnston is offering 320 million new shares at just 53 pennies, a 61-percent discount on Tuesday’s closing price.
The rights issue is being conducted on a "one for one" basis, meaning that the total number of shares in issue will be doubled, according to the Guardian.
This move is aimed to shore up Johnston's business after a plummet in advertising revenues, as well as to allow it to make future investments.
Without such a step, the group said it would have been in danger of breaching its debt covenants, in the event of revenues falling further, the Guardian reported.
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