Johnston Press shares hit record low

Shares in Johnston Press slumped to a record low this morning (5 June) after the company warned of “extremely challenging” trading.

In the publisher’s trading update for the period from 1 January 2018 to 31 May 2018, issued ahead of its AGM today, it said group revenues are down 9%, despite a continuing strong performance from the i newspaper.

It said the trading environment has been exacerbated in recent months by uncertainty around future paper costs and the impact of GDPR on digital advertising revenues.

The group added it expects to see “continued pressure on revenues in the second half of the year, and a requirement for cost savings”. Expectations for the full calendar year 2018 remain in line with market expectations.

In early trading, Johnston Press shares fell by 17.6% to a record low of 7p. They had recovered slightly to 7.10p at the time of writing.

The group has also updated on its strategic review, launched last March, to find a solution to the repayment of £220m in high-yield bonds, which mature in June 2019.

In November 2017 an ad hoc committee of bondholders had been formed to consider certain potential amendments to the group's capital structure, combined with certain proposed amendments to its pension scheme.

While no agreement on these potential amendments has been reached, the group said it is “continuing to work with the ad hoc committee and its other stakeholders on a number of alternative strategic options for the restructuring or refinancing of the bonds prior to June 2019”.

It added any proposal that results from these discussions “will remain subject to negotiation and consent of relevant stakeholders, and there can be no certainty that a formal proposal will be forthcoming”.

The Telegraph reported yesterday that Johnston Press is in talks about a deal that would hand control of the business over to US hedge fund GoldenTree, while jettisoning the pension scheme.

It said the company is in debt restructuring discussions that include plans for a Regulated Apportionment Agreement (RAA) that would offload the pension scheme to the Pension Protection Fund (PPF).

While this restructuring has not been agreed, and Johnston Press has not commented on it, such a move would mean the business would fall under the control of GoldenTree, the biggest holder of the debt.

An RAA would allow GoldenTree to take control of the group and discard pension liabilities without triggering administration, The Telegraph said. But the hedge fund would need to make a payment into the pension scheme to win approval from regulators.

In April, Johnston Press recorded a 9.5% drop in revenue in its full-year results. Sales from continuing operations were recorded at £201.6m, down from £222.7m in 2016. The drop was partially attributed to the sale of its Midlands and East Anglia titles to Illiffe Media in January 2017.

Johnston Press chief executive Ashley Highfield is leaving the group today after more than six years in the role and will be replaced by former Time Out Group chief executive David King, who joined the group as chief financial officer in 2013.