Independent News and Media, owner of The Independent newspaper, says it made a pre-tax loss of €161.4m (£144.9m) loss last year and states it is unlikely to meet its obligations to bondholders, having failed to reach a new deal.
The publishing group says profit fell 165% last year from €248.4 (£222.5m) as it struggled in the “weakening global advertising climate”. Group revenue fell 11.8% to €1.4bn (£1.3bn).
In the UK, total revenue fell 19.8% to €215m (£193m) while the nationals division, comprising of The Independent and The Independent on Sunday, reported advertising revenue down 14.3% on 2007.
The group says that “as a result of the current difficult credit markets”, it has been unable to raise new debt to fund the maturity of the €200m (£179m) 5.75% bond which is due to mature on May 18 and does not have the “sufficient financial headroom available” in its existing facilities to meet its debt obligations.
It adds that there is a “strong likelihood” of a breach of the financial covenants.
The papers have been struggling with falling circulation of late with The Independent on Sunday recorded the largest circulation fall of its rivals in the latest ABCs, dropping 21% to months to 169,777 in the six months to March, while its weekday equivalent also fell by 15.44% year on year to 204,384.
Earlier this month it was reported that INM was working with corporate finance group Lazard on possible options for its national newspaper titles, including its possible sale.
It has been suggested by many observers that decision by biggest shareholder Sir Anthony O’Reilly to step down as chief executive and be replaced by son Gavin O’Reilly, together with other board changes could see a change of attitude towards such a sale.