Late yesterday evening we learned that the Board of Directors of Johnston Press Plc in collusion with the majority bondholders, US hedge fund GoldenTree Asset Management, filed for administration of Johnston Press for the purpose of effecting an immediate sale and transfer of its business to a new company, to be run by the current Johnston Press CEO Mr King, and controlled by the bondholders, in a so-called pre-pack. We understand the Johnston Press pension scheme will not transfer to the new company resulting in the pensions of the hardworking and loyal staff of Johnston Press being severely reduced.
Custos Group is the largest shareholders in Johnston Press and we have worked tirelessly as an activist shareholder to change the composition of the board so we could implement the necessary changes in direction which would provide a better and brighter future for the company itself, its staff and members of the pension scheme.
At every stage we have been thwarted by a self-serving board which, in clear breach of its fiduciary duties, has only been interested in protecting itself and the bondholders.
When issuing the bond, the Board included a “poison pill” in its terms, the first of its kind in the UK, which meant that the overall control of the Board was safe guarded as if that were to be changed, then that would trigger the repayment of the £225 million bond debt.
We have consistently accused the Board of not having fresh ideas or a clear and effective strategy for the way forward. They have done nothing more than re-arranging the deckchairs on the Titanic. When Custos attempted to appoint a director to the Board to inject some much-needed direction and oversight, the Board ensured that this was blocked by deliberately misrepresenting to all shareholders that such a move would trigger repayment of the bond, when in fact it would have done no such thing, as we did not seek to change the control of the board.
This Board is purely self-interested, with a toxic mix of incompetence, arrogance and entitlement added. Their actions today, ensuring their own jobs are safe, but sacrificing the pensions of their loyal staff, many of whom will no doubt also lose their jobs under the new ownership of a US hedge fund, is simply a disgrace and a vulgar display of the worst elements of capitalism.
The Board of Johnston Press, had they been willing to cooperate with their largest shareholder, could have ensured a bright future for the company. According to all the public statements of the Board, Johnston Press has are as on able cash flow and was not insolvent. Indeed, the bond debt is not due and payable until June 2019 – another 7 months away! We believe, this is plenty of time for us to have managed to put in place are financing had we only been given the chance. However, instead of having a sensible dialogue with us and working with us to achieve a genuine rescue for the benefit of all stakeholders as well as JP’s staff and their pensions, the Board has instead done what they could to hinder us whilst paying lip service to the notion of saving the company. The strategic review and the formal sale process were nothing more than a complete sham. However, it is now clear for all to see that the Board of Johnston Press has instead only been pre-occupied with one thing, namely the sacrifice of the company’s staff and their hard-earned pensions in order to save the Board’s own jobs by colluding with Bondholders. Such actions are simply shameful and disgusting and Custos will now fight to hold this despicable Board accountable for their contemptible actions.
As a public declaration and vote of confidence in the staff and business of Johnston Press and its proud 250 years long history, Custos recently increased its stake in Johnston Press from 20% to 25%. That the Board, in which we had absolutely no confidence, 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. Moreover, it simply proves our point that the Board is totally incompetent and bereft of ideas and, in colluding with GoldenTree, is acting out of pure personal self-interest and personal self-preservation. Custos is a tireless activist and fighter and, on behalf of all stakeholders in, and staff of, Johnston Press we will do everything in our power to overturn and unwind this abominable deal.