Pmp Rebounds As Banks Come To The Party
Sydney Morning Herald
Friday July 6, 2001
The wolves retreated from PMP's door yesterday, after the company's bankers committed to refinancing the $558 million debt the print and publishing group is carrying.
The news eased concerns about PMP's solvency and sent its shares bouncing back 32 per cent, or 12c, to 49c, their highest level in a fortnight.
PMP shares plumbed a record low of 32.5c earlier this week amid fears that the debt-laden company could be on the verge of bankruptcy.
PMP said yesterday that it was negotiating with its banks, which include National Australia Bank, Westpac, Toronto Dominion and ANZ, to refinance its domestic loans. It confirmed that it had deferred the $50 million it was due to repay Westpac on Monday.
``PMP has the full support of all its banks and has more than adequate funding to support the continuing requirements of the group," said PMP in a statement to the Australian Stock Exchange. PMP claims to have undrawn facilities of $47 million and $58 million cash on hand.
However, the terms and conditions of the new debt facility have yet to be agreed and will not be finalised until next month.
Analysts said that it was unlikely that the banks would seek management changes or further asset sales as part of the conditions of the financing.
Market participants have long speculated that PMP may be forced to sell some of its Australian magazine titles, which include mass market weeklies New Idea and TV Week, to reduce its massive debt.
``They wouldn't get a good price for the assets at the moment," said one analyst. ``I think the banks are going to stick it out and try and trade out of this."
The banks are instead expected to hit PMP with higher interest rate charges. PMP paid 8 per cent interest on its loans in the 2000 financial year.
PMP's lenders are also expected to impose certain covenants encompassing interest cover and debt gearing levels. After slashing its earnings forecast for the third time in six months, PMP's interest cover is now less than two times the $20 million to $25 million pre-abnormal profit forecast for the 2001 financial year.
PMP has come under increasing pressure since April when the Australian Competition and Consumer Commission blocked its proposed $630 million merger with the Hannan family's Independent Print & Media Group.
Its balance sheet already smarting from the downturn in the advertising market, PMP is also struggling to offload its UK magazines for the $150 million it originally sought. After credit agency Standard & Poor's placed the company on a negative credit watch earlier this week, PMP was forced to concede that the sale of the Attic Futura business was unlikely this month.
It is understood that PMP has found a willing buyer prepared to pay a price that is acceptable to PMP for the UK titles. However, the sale hinges on the interested party resolving some difficulties of its own. PMP is hopeful that it will have sold Attic Futura by early August.
TO THE EDGE AND BACK
* Mar 01: PMP proposes $630m merger with private printing group IPMG.
* Apr 27: ACCC blocks merger of the country's two biggest printing operations.
* May 17: Standard & Poor's downgrades PMP's credit rating from BBB- to BB+.
* Jun 05: PMP issues third earnings warning in less than six months.
* July 3: S&P places PMP on negative credit watch, shares slump to 32.5c.
* Jul 05: PMP confirms it is renegotiating bank financing and has deferred $50m loan repayment.
© 2001 Sydney Morning Herald
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