It appears that the City has just woken up to the drama that is Johnston Press. According to a Daily Telegraph report, the chairman has called in restructuring experts to help the debt-saddled newspaper business.
Camilla Rhodes, who has chaired the company for just a couple of weeks, is said to have asked Rothschild to examine Johnston’s refinancing options.
The publisher of the Scotsman and Yorkshire Post, which has a current market capital of less than £20m, owes £220m in bonds that are due to mature in 2019.
Her action follows a report in the Sunday Times that Johnston Press’s chief executive, Ashley Highfield, is facing a battle to keep his job because shareholders are upset about his strategy.
The largest shareholder is the activist fund Crystal Amber, with a stake of 20.4%, and its representatives are expected to meet Rhodes this week in order to question her about the company’s management.
Immediately after becoming CEO in 2011, Highfield set about reducing costs. In 2014, he negotiated a refinancing deal that was aimed at putting the company on a __more secure financial footing.
Gradually, however, matters have worsened. They were not improved by the £25m acquisition last year of the national daily, the i newspaper. Last month, Johnston sold off 13 “non core” titles in East Anglia and the east Midlands to Iliffe Media for £17m.
Highfield said the deal marked “a major milestone in our divestment strategy” and, by reducing debt, had put Johnston “on a stronger financial footing.”
But Crystal Amber, and other shareholders, remained sceptical about the overall situation. One bone of contention has been Highfield’s pay package.
Following his restructuring initiative, he pocketed £1.65m in 2014, with £645,000 awarded as a bonus, half of which was paid in shares. His salary fell 65% to £581,000 in 2015.
The Sunday Times quoted a shareholder who was critical of Highfield’s pay while another told the paper dismissively: “A better word for Highfield’s restructure would be destruction.”
Now all eyes are on Rhodes, who joined the board as a non-executive director in 2009 after 28 years as an executive with Rupert Murdoch’s UK division of News Corp.
She was appointed as interim chairman of Johnston in December to replace Ian Russell, who stepped down due to a family illness.