Johnston Press shares are trading at an all-time low of 3p per share as the i and Scotsman publisher looks to refinance bond debts totalling Â£220m that are due for repayment in June next year.
The local news publisher has seen share prices fall steadily since February 2015, when they were Â£1.72 per share. By contrast, in April 2007 JPâ€™s shares were trading at a high of Â£4.82 per share.
According to its full-year financial statement for last year, JP made Â£14.2m in profit, before tax, on revenues of Â£201m and earnings (EBITDA) of Â£40.1m â€“ all of which fell year on year.
Press Gazette understands the share price drop is down to market concerns that the news publisher, which has more than 200 regional news titles, will not be able to renegotiate its sizeable debt.
With Â£24.6m cash in the bank, JP puts its net debt at Â£195.9m. This is a considerable reduction from peak debts of Â£751m in 2006.
Nonetheless the figure is understood to be too high given the current size of the business, which has constrained the groupâ€™s ability to return to growth.
A JP spokesperson said: â€œA number of potential strategic options are being considered by the company and its advisers which we expect to discuss with stakeholders in due course.
â€œWe have updated the market on a number of occasions. No decisions have been taken and we are not going to comment on market speculation.â€�
JP formed a committee of bondholders in November last year as part of a strategic review to consider options for restructuring or refinancing its debt.
Changes to the groupâ€™s pension scheme have been proposed, although it is understood that no agreement has yet been reached.
If there is no agreement reached in discussions with stakeholders, JP will be forced to seek alternative refinancing and restructuring options.
The group confirmed it had recently been contacted by its largest shareholder, entrepreneur Christen Ager-Hanssen who owns Swedenâ€™s equivalent to the Metro newspaper, about its plans to tackle the debt.
Ager-Hanssen owns a 20 per cent stake in the 250-year-old publisher through his private equity firm Custos Equity.
In a letter, seen by the Daily Telegraph, he asks JP whether it is considering a pre-packaged deal, or “pre-pack”, that would begin negotiations to sell the company ahead of it potentially going into administration.
A pre-pack deal is a rescue tool that can help ensure a quick sale of a company’s assets once an administrator is appointed, helping preserve key jobs and contracts.
Ager-Hanssen said his inquiry was made â€œin my capacity as a potential funder and prospective rescuer of and/or bidder for the companyâ€™s assetsâ€�.
The Telegraph says it understands from sources that such a deal is one of the options being considered by JP.
Said a JP spokesperson: â€œIf Mr Ager Hanssen does have a workable proposal to refinance the business, we look forward to receiving this and we will invite him to provide more detail.â€�
In May, JP’s chief executive Ashley Highfield resigned after seven years in the role to fulfill career plans to become a non-executive director. He was replaced byÂ chief financial officer David King in June.
Regional daily titles published by JP include the Yorkshire Post, Sheffield Star, Sunderland Echo, Belfast News Letter, The News in Portsmouth, and the Wigan Evening Post.
Picture: Johnston Press
Source: Digital Journalism