Scottish publishing house Johnston Press has confirmed negotiations to reach a Regulated Apportionment Arrangement (RAA), in a bid to offload its pension scheme to the Pension Protection Fund.
The Edinburgh-based publisher, which owns more than 200 regional newspapers in England, Scotland and Ireland, has responded to media reports that it was in debt restructuring talks with US hedge fund GoldenTree, which currently owns the majority of its £220m senior secured bonds, due to mature on 1 June next year.
A Telegraph report earlier this week suggests that Johnston Press would not be able to repay these bonds and could therefore fall under the control of the hedge fund, which in turn would involve an RAA deal to offload its pension scheme to the Pension Protection Fund, the lifeboat for UK pension schemes.
A spokesperson for Johnston implicitly acknowledged the talks, stating that: “the expectation reflected in these forward-looking statements are reasonable, it can give no assurance that the expectations will prove to have been correct.”
With regard to the RAA deal, he confirmed that and RAA was “one of a number of potential strategic options for restructuring or refinancing of the bond being considered by the company and its advisers.”
RAA deals are subject to regulatory approval by The Pensions Regulator (TPR) and the Pension Protection Fund. Sing-offs for these agreements tend to be very rare. Over the last year, only two RAA deals were confirmed by the TPR.
A spokesperson for TPR stated that any approval of an RAA would be subject to a number of stringent conditions. Among others, the regulator will consider whether insolvency of the employer would be otherwise inevitable or whether there could be other solutions which would avoid insolvency.
The regulator will also consider whether an insolvency could result in a better outcome for the scheme or whether the regulator might need to use its anti-avoidance powers in order to enforce a better outcome for the scheme.
A spokesperson for the PPF responded to the reports by stating: “We can’t comment on the circumstances of this company. In the event of an insolvency event at a company with an eligible pension scheme, members can be reassured that we are there to protect them.”
Shares for Johnston Press, dropped by 16% on Tuesday and a further 15% on Wednesday, as the group issued profit warnings over the impact of growing paper costs and the prospect of GDPR hitting its advertising revenue.
