Johnston Press Plc (JPR), the U.K. publisher seeking to refinance about 330 million pounds ($556 million) of debt, increased the size of its first bond sale amid investor demand for riskier securities.
The company is selling 225 million pounds of notes with a coupon of 8.625 percent after initially marketing 220 million pounds to pay 8.75 percent, according to a person familiar with the matter. Yields on junk-rated bonds in the currency fell to an average 5.5 percent, 12 basis points from a record low reached April 29, Bank of America Merrill Lynch index data show.
The publisher of The Scotsman and The Yorkshire Post is raising capital as part of a corporate restructuring to tackle declining circulation and sales. Cost-cutting helped the Edinburgh-based company boost its profit margins and cash flow in 2013, it said in an April 25 report.
“For a turnaround story, you’re being compensated for the risk,” said Steven Mitra, a London-based partner at hedge fund LNG Capital LLP. “They are taking the measures to turn this business around towards a digital footprint and content.”
Johnston is seeking to reduce the group’s indebtedness and extend its loan maturities, the Edinburgh-based company said in a statement May 9. As part of the capital refinancing, it plans to raise a total 140 million pounds from selling shares, and another 25 million pounds from a new five-year revolving credit facility, according to the statement.
Sophie McNulty, a spokeswoman for Johnston Press employed by Buchanan Communications, declined to comment on the refinancing.
Johnston is provisionally rated B3 by Moody’s Investors Service, six levels below investment grade.
To contact the reporter on this story: Julie Miecamp in London at email@example.com