Johnston Press shares were hammered yesterday after the troubled newspaper publisher revealed it was in rescue talks that could see it sell its pension fund.
The owner of the i newspaper, The Scotsman and 200 local newspapers is in crisis talks with US hedge fund Golden Tree about restructuring its crippling £220million debts.
One of the options being considered is a so-called Regulated Apportionment Arrangement, which would allow it to dump its £609million pension scheme into the Pension Protection Fund.
If it goes down this road, Golden Tree would take control of Johnston Press.
Johnston Press is in crisis talks with US hedge fund Golden Tree about restructuring its crippling £220m debts
However, these types of arrangement are extremely rare and would need to be approved by both the Pensions Regulator and the pension lifeboat fund.
In a separate trading update, Johnston reported a 9 per cent fall in revenue in the first five months of the year, which sent shares plummeting 11.1 per cent, or 0.95p, to a record low of 7.55p.
The publisher said the EU’s tough new data protection rules had hit digital revenues. ‘We expect to see continued pressure on revenues in the second half of the year and a requirement for cost savings,’ it added.
The FTSE 100 fell 0.7 per cent, or 54.49 points, to 7686.8 after the pound strengthened sharply against both the dollar and the euro. The FTSE 250 edged 0.28 per cent, or 58.74 points lower, to 21051.86.
Stock Watch – Imaginatik
Imaginatik shares crashed after the software firm walked away from a potential sale following a strategic review.
The struggling AIM-listed tiddler, which makes management software, said talks with interested parties had failed.
Instead Imaginatik has slashed £750,000 of costs and secured £225,000 of fresh funding as it battles to stay in business. Chairman Matt Cooper and chief executive Ralph Welborn had resigned.
Shares dived 48.6 per cent, or 0.54p, to 0.56p.
Analysts predict the situation at distressed advertising giant WPP will ‘get worse before it gets better’.
Berenberg says fees will come under pressure following the departure of chief executive Martin Sorrell, which will lead to a sharp fall in margins over the next two years.
The warning comes amid speculation that Sorrell’s exit could result in the firm losing key contracts or even see it broken up and sold to rivals.
In a further blow, Berenberg slashed WPP’s rating to ‘sell’ as concerns grow over the group’s future profitability.
Sorrell, 73, made a shock return to the City with S4 Capital 48 hours after leaving the company he founded amid allegations of misconduct, which he denies.
In a note, Alastair Reid, analyst at Berenberg, said: ‘Regardless of the reasons for the recent management change, WPP’s first quarter relative performance versus peers, particularly in North America, showed that all is not well from an operational perspective.
‘We think that this will prove more difficult and costly to fix than consensus expects.’
Shares trundled 3 per cent, or 37.5p lower, to 1213p.
Carnival was rooted to the bottom of the FTSE 100 after Morgan Stanley slashed its target price from 5100p to 4800p to reflect falling demand for cruises and higher fuel costs. Shares sank 6.4 per cent, or 312p, to 4561p.
Royal Bank of Scotland was the second biggest faller on the blue-chip index after the Government sold 7.7 per cent of its 70 per cent stake in the bank at a £2.1billion loss. Shares slumped 5.3 per cent, or 14.9p, to 266p.
Shares in office space provider IWG flopped after Lone Star, the US private equity firm, backed away from a potential deal.
However, analyst Andrew Shepherd-Barron at broker Peel Hunt believes there will still be a competitive auction for the firm, with Prime Opportunities, TDR Capital and Starwood Capital still thought to be in the hunt.
Despite this, the broker cut IWG’s rating from ‘buy’ to ‘hold’, given its shares are already above estimates. IWG shares dipped 2 per cent, or 6.6p, to 313.3p.
On AIM, shares in private jet services firm Gama Aviation nose dived 12.6 per cent, or 28.5p, to 198p after it reported flat trading and warned of ‘somewhat challenging’ conditions in Europe.