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Johnston Press still seeking to refinance debt

EDINBURGH-based publisher Johnston Press has confirmed it is still seeking to refinance its £300 million debt pile this year to avoid penal interest rates that kick in after the end of 2014.

A focus on cutting costs, including the loss of 607 jobs during the financial year to December 28, helped the publisher of the Scotsman and Yorkshire Post newspapers to an underlying pre-tax profit of £54.3m, up 2.5% on the year before.

This was its first increase in earnings for seven years.

But after writing down the value of its newspapers by £202.4m earlier in the year, and paying levies to the Pension Protection Fund, the company posted a loss before tax of £286.8m, compared to a £6.5m loss in 2012.

Chief executive Ashley Highfield said: "Our digital growth remains strong, with significantly increasing audiences coming to our websites in 2013 and into 2014.

"Along with slowing declines in print advertising revenues, and a stable circulation revenue decline rate, these are clear indications of good progress during the year in the implementation of our strategy for growth." Johnston Press's debt, built up ahead of the credit crunch as it went on an acquisition spree, dropped 5.4% during the year to £302m. This contributed to a £3.4m reduction in net finance costs to £41m.

In 2012, Johnston refinanced its lending facilities through to September 2015, a deal that was secured in part by offering warrants on shares to the banks supporting it.

The company, which is paying interest rates of up to 10.3% on its debt, now faces a critical period as it seeks to renegotiate its debt before the end of 2014 to avoid a pick-up in interest rates.

"The terms of our facilities provide strong incentives to implement an alternative debt structure by the end of 2014," Mr Highfield said.

"We are now actively engaged in seeking a more fundamental restructuring of our debt that would provide a more normalised capital structure, which would in turn provide an optimal platform for the company to continue its strategic initiatives."

The company confirmed earlier this month that it might seek to issue shares to raise funds.

Johnston Press also warned that it could face a bill of up to £8 million in a legal dispute with its pension fund.

Johnston Press's shares yesterday shed 1.5p or 6.25% to close at 22.5p.

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