Sunday 14 August 2016 7:32 pm

Johnston Press boss defends bond buybacks

Johnston Press defended plans to buy back its own bonds at a healthy discount.

The beleaguered publisher, whose share price is a fifth of where it was at the start of the year, said that this was not a new policy.

"We have always stated we would use disposals to both strengthen balance sheet and pay down debt," said chief executive Ashley Highfield.

Read more: Johnston Press CEO talks the i, Lebedev and the future of print

The Edinburgh-based company's bonds are trading at a considerable discount. Prices vary but last traded values on the Frankfurt exchange were just under 60p/£, meaning that it could net a considerable saving of the full capital value that is due for repayment in 2019.

The bonds have a 8.625 per cent coupon and cost the company nearly £20m per year just to service interest.

Interim results disclosed on 4 August revealed six-month operating cash flow plummeted from £25m in 2015 to £3m in 2016. This led to cash balances falling from over £40m to £11m – although this did include paying £22m for the i newspaper in February.

Read more: Shares plummet at newspaper publisher "triple-hit" by Brexit vote

The company previously announced a strategy to sell off non-core titles. In July, it announced that it would sell its Isle of Man papers to Tindle Newspapers for £4.25m.

With dwindling cash reserves, Highfield declined to comment on whether it would, or could, use any of the £25m undrawn revolving credit facility to fund the bond buyback process.

However, the chief executive did quash rumours of problems with meeting facility covenants. 

"[There are] no expected covenant breaches," he said.