Johnston Press Plc, 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.