Yorkshire Post owner raises cash as downturn bites

YORKSHIRE Post owner Johnston Press today announced a deeply discounted rights issue to prevent it breaching debt covenants following a downturn in advertising.

The regional newspaper publisher, which also owns The Scotsman, Yorkshire Evening Post, Sheffield Star and Halifax Courier, is to raise £212m through an issue of new shares at 53p – a discount of 61% to last night’s closing price.

It announced the move as it revealed that advertising revenues were down 7.1% on a like-for-like basis in the 17 weeks to April 26, hit by declines in property, jobs and motoring adverts.

Malaysian investment firm Usaha Tegas will also take a 20% stake in the Edinburgh-based company, through a share subscription and the acquisition of a further 10% of Johnston Press from the group’s family trusts.

Its shares opened down 10% at 122p this morning.

“Given the recent reduction in consumer confidence, and deteriorating economic forecasts, the board believes that the prudent action is to raise equity capital in order to reduce debt,” the group said.

“Given the more challenging environment, the group is working hard on managing its cost base and, providing there is no further deterioration in the advertising environment, expects to deliver a satisfactory result for 2008 in very difficult circumstances.”

The move will raise fears of further job losses at its newspaper titles where it has recently announced the redundancies of 59 printing workers at its Leeds operation as it moves the printing of the Yorkshire Evening Post to South Yorkshire, the first time it has been printed outside the city in more than a century.

Johnston Press, which is one of the largest local and regional newspaper publishers in the UK, has net debt of £700m.