An international war of words has erupted over the fate of Johnston Press, owners of the Stornoway Gazette, The Scotsman and more than 200 other newspaper and website titles.
The group, which also includes the I newspaper, and The Yorkshire Post, is preparing to enter into administration, the company confirmed last night (Friday November 17th).
But one of the company’s main shareholders – with around 25 per cent of the now worthless stock – has denounced the deal on Twitter as “simply a disgrace and a vulgar display of the worst elements of capitalism.”
Christen Ager-Hannsen, CEO of Custos, said: “We have consistently accused the Board of not having fresh ideas or a clear and effective strategy for the way forward.”
The publishing group was trying to refinance £220m of debt that became repayable in June this year. Over the last 10 years, it had succeeded in cutting its debt mountain back from a reported peak of £793m.
Christen Ager-Hannsen has been campaigning for many months for a change of strategy – but the Johnston Press board was locked into a deal with the bondholders which meant if the existing Board lost control, the £225 million bond debt had to be repaid.
Custos describes itself on Twitter as “Headquartered in London, Custos is an investment firm looking for the company of tomorrow and world-beaters in Disruptive Innovation.”
On October 22, Christen Ager-Hannsen said on Twitter about the Johnston Board: “The board of Johnston Press are arrogant, ignorant and incompetent mixed with greed and selfishness. Not a pretty cocktail of personality traits for a board that need to define a clear strategy and an equity story fit for the digital age. Textbook case of shareholder-value destruction.”
Johnston Press has consistently blamed its woes on the advance of Internet advertising involving Facebook and Google. However, a look at the figures shows the market disagrees with that. Shareholder value was almost obliterated in 2008-9 long before the impact of the social media giants became apparent. Shares fell to around one per cent of their peak value – from £6 down to 6p. The expansion of the previous decade having been funded from borrowing, the company was left in thrall to its creditors – and unable to respond effectively to dynamic change, weighed down by newspaper traditions, and the vast overhang of debt.
And when its advertising income declined over this summer after an earlier apparent return to growth, the setback was blamed again on changes in Google and Facebook algorithms.
In a statement published by the Press Association, the publisher said: “The board has concluded that there is no longer any value in the ordinary shares of the company.”
In an email to staff, the company’s chief executive David King talked of a “brighter future”.
King said the publisher will apply for court approval to be sold to a newly-incorporated group of companies controlled by its creditors.
Christen Ager-Hannsen says this will involve the majority bondholders, the American hedge fund Goldentree Asset Management and a new company run by the present Johnston CEO. King joined the Board in June 2013 and was previously Chief Executive Officer at Time Out Group, the print and digital entertainment information business. Before that, he was Chief Financial Officer of BBC Worldwide having qualified as a chartered accountant in 1984.
Christen Ager-Hannsen goes on: “That the Board…can honestly think that turning the business over to a greedy New York hedge fund is the only viable solution for Johnston Press, simply beggars belief. Custos is a tireless activist and fighter and, on behalf of all stakeholders in, and staff of, Johnson Press we will do everything in our power to overturn and unwind this abominable deal.