Stop Press: The Case of Johnston Press plc

Introduction

On the morning of Saturday 17 November 2018, the Scottish Court of Session, the High Court of Justice of England and Wales and the High Court of Justice of Northern Ireland granted out-of-court-hours administration orders in respect of Johnston Press plc and 41 of its subsidiaries, drawing to a close the Edinburgh-based publishing group’s comprehensive strategic review of its business, and facilitating a complex pre-packaged administration sale of the group’s assets to a newly incorporated set of companies backed by the group’s bondholders.

The transaction, which invoked the group’s contingency plan after all solvent restructuring options had been exhausted, is a rare example of an operating level pre-pack of a publicly listed group. In contrast to the many examples of holding company level pre-packs, an operating level pre-pack, which involves the transfer of a business as a going concern, asset by asset, contract by contract, requires months of detailed commercial planning to minimise the high risk of business disruption. The Johnston Press pre-pack was particularly challenging owing to the additional overlay of public disclosure obligations arising out of the group’s listed equity and debt securities (which were held by a mix of institutional and retail investors, and activist shareholders) significant pensions liabilities, a unionised workforce, and, in light of the nature of its business, constant scrutiny in the national press.

Background

History

Johnston Press began as a family printing business based in Falkirk, Scotland. The family purchased its first newspaper, The Falkirk Herald, in 1846, and over the next 170 years continued to grow by acquisition, slowly expanding its portfolio to include nearly 200 newspaper titles across Scotland, England, Northern Ireland and the Republic of Ireland, including The Scotsman, the i newspaper, The Yorkshire Post and The News Letter (Northern Ireland).

The business, which by the mid 1980s was a multimedia organisation providing news and information services to local, regional and national communities through its portfolio of publications, was floated on the London Stock Exchange as Johnston Press in 1988. During the financial year ending 31 December 2017 (based on the group’s last reported annual accounts prior to its filing for administration), the group sold 160.1 million ‘paid for’ newspapers, distributed 23.7 million free newspapers and its average total monthly print audience was 13.3 million people. It was, and remains, one of the United Kingdom’s largest regional newspaper publishers – a very important field in the current climate of the challenges facing journalism from global social media sites and the rising tide of fake news.

Group structure

The key companies within the group, which are shown on the structure chart set out below,^[2] comprised:

• Johnston Press plc (PLC), the ultimate parent company and issuer of the group’s listed equity;
• Johnston Publishing Limited (Publishing), the primary operating member of the group, which owned most of its physical assets. Publishing also provided contract printing services to third-party customers, and administrative and other operational services to the rest of the group;
• Johnston Publications Limited (Publications), the owner of the i newspaper, which was acquired by the group in 2016; and
• Johnston Press Bond plc (Bondco), a special purpose finance vehicle with no trading activities and issuer of the group’s listed debt securities.

The majority of the group’s intellectual property (aside from that relating to the i newspaper, which was owned by Publications) was held by various other subsidiaries of PLC (the Agency Companies) and licenced to Publishing for day-to-day operation.

Capital structure

In order to fund the growth of its business over the years, Johnston Press had entered into various financing arrangements.

In June 2014, the group completed a £360 million capital refinancing plan to deleverage its balance sheet, and to repay and redeem its then-existing revolving credit facilities, overdraft facilities and private placement notes.

In connection with the capital refinancing plan, in addition to raising £140 million of new equity from shareholders pursuant to a placing and rights issue, the group issued £225 million 8.625 per cent senior secured notes due June 2019 (the Bonds) pursuant to a New York law-governed indenture (the Indenture), the proceeds of which were used to repay the revolving credit facilities, overdraft facilities and private placement notes referred to above. In 2015, £5 million of the Bonds were repurchased and subsequently cancelled by Bondco, leaving £220 million of principal outstanding Bonds.

The Bonds were listed on the Global Exchange Market of the Irish Stock Exchange and unconditionally guaranteed on a senior secured basis by all material members of the group (the Guarantors). The Bonds also benefited from first-ranking security interests over all, or substantially all, of the assets of Bondco and the Guarantors.

In connection with the capital refinancing plan, the group also entered into a £25 million super senior revolving credit facility (RCF). This was subsequently cancelled in January 2017 following the sale by the group of its East Midlands and East Anglia newspaper titles for £17 million. Accordingly, at the time of the restructuring, the holders of the Bonds (the Bondholders) were the group’s only material external financial creditors. To establish the relative rights of the lenders of the RCF and the Bondholders with respect to each other and the group, PLC and certain subsidiaries had entered into an English law-governed intercreditor agreement (the Intercreditor Agreement). Despite the cancellation of the RCF, the Intercreditor Agreement remained in place as between the group and the Bondholders, and as between the Bondholders and their note trustee and security agent, providing helpful mechanisms for effecting the debt-for-equity swap that formed the basis of the consideration for the pre-pack.

Pension scheme

The group had certain occupational pension schemes, including a defined benefit pension plan, the Johnston Press Pension Plan (the Pension Plan). As at 31 December 2017, the Pension Plan had a funding deficit of approximately £47.2 million on a Financial Reporting Standard 17 basis. However, as at 31 March 2018, the deficit on a ‘buy-out basis’ was approximately £420 million.

In April 2014, in connection with the capital refinancing plan, the trustees of the Pension Plan (the Pension Trustees) and the group entered into a framework agreement that determined a recovery plan for the Pension Plan deficit that required the group to make specific enhanced contributions over a 10-year period. All material members of the group (other than Publications, which at that time had not then been incorporated) entered into a cross-guarantee in respect of the Pension Plan deficit and to support the group’s obligations under the framework agreement. The cross-guarantee was not secured. Accordingly, at the time of the restructuring, the Bondholders were the group’s only secured creditors.

Strategic review

Industry in structural decline

The group’s principal revenue streams comprised newspaper sales, print and digital advertising as well as contract printing. Changing consumer behaviour, including the rise of social media, had put considerable pressure on publishers, and newspaper circulation in print had been in decline for a number of years as part of a global trend in which news and information consumption shifted from traditional printed to digital product. Despite the group’s successful implementation of a broad range of measures to mitigate the effects of this structural decline, including its acquisition of the i newspaper, which had, primarily through its digital platform, provided a boost to the group’s financial performance, it soon became clear that the group faced an unsustainable long-term debt and Pension Plan deficit burden.

In light of the challenging trading environment and deterioration of the group’s financial performance, there was uncertainty (and market speculation) as to whether the group would be able to repay or refinance the Bonds as would be required upon their maturity in June 2019. In March 2017, PLC announced that it had commenced a strategic review of its business to assess the financing options in respect of the Bonds available to the group.

No default

As is typical with high-yield bonds, the Indenture did not contain any financial maintenance covenants. Therefore, as the group remained cash generative at an operational level and did not have any immediate liquidity issues, despite the overarching industry and financial pressures on the business, there was no existing or anticipated default in respect of the Bonds. In other words, there was no documentary ‘trigger’ that placed the Bondholders in the driving seat in respect of a restructuring process.

On the one hand, this gave the board flexibility in terms of approach and timing to explore all strategic options for placing the group’s business on a more stable footing for the future. However, on the other hand, it put considerable pressure on the directors to balance the interests of shareholders (some of whom were extremely vocal, both towards management and in the national press); and on finding the best strategy to address its financial concerns as well as the interests of the group’s Bondholders, being the group’s only secured creditors, and other key stakeholders, including the Pension Trustees and some 2,000 members of Johnston Press staff.

In the current ‘covenant-lite’ corporate lending environment, directors of both public and private companies are likely to find this tension between competing interests increasingly challenging, particularly when deciding when to signal to the market that a restructuring of their business may be necessary, or when to commence restructuring discussions with the relevant stakeholders. In the case of Johnston Press, the management team (acknowledging the long-term challenges for the business operating in an industry in structural decline) took a commercially pragmatic view that assessing the financing options in respect of the Bonds available to the group well ahead of the maturity of the Bonds would allow sufficient time to fully consider all possibilities that would be in the best interests of the group’s stakeholders.

Strategic options

The group, together with its financial and legal advisers, explored multiple options, including a fully consensual debt-for-equity swap, equity led or third-party refinancing of the Bonds, a regulated apportionment arrangement in relation to the Pension Plan, as well as a formal sales process for the group, as a whole or in part.

Fully consensual debt-for-equity swap

This option would have involved the Pension Trustees agreeing to amend certain actuarial and technical assumptions in their assessment of the Pension Plan deficit and to reduce the required level of the group’s annual contributions towards that deficit; the Bondholders exchanging some or all of the Bonds for a majority equity stake in PLC, thereby reducing or removing the requirement for the group to repay or refinance the Bonds in June 2019; and shareholders being invited to inject new capital into the group to avoid dilution of their existing equity investment.

The group held initial discussions regarding this potential solution with the Pension Trustees, who provided constructive feedback and cooperation with regard to progressing the proposals for certain amendments to the assumptions relating to the assessment of the Pension Plan deficit.

The group then held initial discussions with the financial and legal advisers to an ad hoc group of Bondholders (the Ad Hoc Committee) comprising several of the largest Bondholders, as well as the Pensions Regulator and the Pension Protection Fund (PPF). Following these discussions, the Pensions Regulator and the PPF expressed some reservations regarding the potential actuarial and technical amendments and whether they would assist with appropriately managing the Pension Plan deficit in the long term. Further, the advisers to the Ad Hoc Committee informed the group that the fully consensual solution would not be acceptable to the Ad Hoc Committee (and likely not acceptable to other Bondholders) on the basis that it would not deliver appropriate value to the Bondholders as it would put the Bondholders in the equity, behind other creditors, including the Pension Plan, which was a substantially weaker position than the Bondholders had currently within the group’s capital structure as the group’s only secured creditors.

Equity-led refinancing

Throughout the strategic review, the group sought to engage with some of PLC’s largest shareholders to determine whether they would be prepared to invest further equity (or provide alternative funding) to support a refinancing or restructuring of the Bonds. However, despite various meetings between management and individual shareholders, no proposals were received.

Similarly, although the eight largest shareholders of PLC were each invited to participate in the formal sales process when this was launched in October 2018, no shareholders submitted offers for the group, either as a whole or in part.

Third-party refinancing of bonds

During the summer of 2018, the group’s financial advisers engaged with potential third-party lenders across the high-yield bond, credit fund and bank financing markets to gauge appetite to provide or arrange financing for Johnston Press on a variety of bases. However, in light of the pressures facing the publishing industry as a whole, as well as the group’s deteriorating financial performance, the feedback received was that the debt capacity of the business was substantially lower than the level of outstanding Bonds. Each of the parties approached declined to progress the opportunity further and it was concluded that a debt refinancing at a level acceptable to Bondholders would not be a viable option.

Regulated apportionment arrangement in relation to the pension plan

A regulated apportionment arrangement (RAA) is a statutory mechanism pursuant to which the obligations of a sponsoring employer of a pension scheme are transferred to the PPF through a series of interrelated steps. RAAs have only been available since 2008 and are intended (and have proved) to be extremely uncommon. In order for an RAA to be achieved, certain statutory conditions must be satisfied, including the approval of the arrangement by the Pensions Regulator and there being no objection to the arrangement being made by the PPF. In practice, this means that both need to be closely involved in negotiations relating to the terms of the RAA, and the mitigation package proposed in connection with the RAA (often comprising a cash payment to be made by the employer upon transfer of the pension scheme to the PPF or the grant of equity in the continuing business, in both cases to the PPF) needs to meet the Pension Regulator’s and the PPF’s respective policies and guidance criteria.

In July 2018, Johnston Press approached the Pension Trustees, the Pensions Regulator and the PPF to discuss a potential RAA in relation to the Pension Plan, putting forward a mitigation package comprising a substantial cash payment and the issuance of equity in the restructured group to the PPF, with a view to securing an arrangement that would have effectively enabled the group to detach itself from its liabilities in respect of the Pension Plan. This would have addressed the Ad Hoc Committee’s key concern regarding the fully consensual solution described above, which, in turn, would have unlocked that option and potentially allowed the group to avoid a formal insolvency process.

Over several months, discussions between Johnston Press, the pension parties and the advisers to the Ad Hoc Committee took place. However, ultimately, it became apparent that no agreement on the economic terms of an RAA, specifically the mitigation package, was likely to be reached between the pension parties and the Ad Hoc Committee (which represented the views of the Bondholders), making the possibility of achieving an RAA remote.

Formal sales process

Having explored the other options described above, in October 2018, PLC commenced a formal sales process in accordance with the City Code on Takeover and Mergers, inviting a mix of strategic parties,^[3] financial investors and, as mentioned above, the company’s eight largest shareholders to submit offers for the group as a whole or for certain of the group’s operations in part, it having been determined that offers in the formal sales process should be sought on a variety of bases to ensure that all options were fully explored. The formal sales process was publicly and widely reported both in print and online media by local, regional, national, trade, specialist and investment press, as well as newswires.

Indicative offers were solicited from both potential strategic parties and financial investors for the whole of the group as well as for certain parts only. The highest indicative offer received valued the group between £140 million and £150 million on a debt-free, cash-free, pension-free, going-concern basis subject to adjustments – not enough to generate aggregate net sale proceeds sufficient to fully discharge the £220 million in principal outstanding bonds.

Contingency planning

In parallel to the strategic review (as is customary for businesses facing financial difficulty), the group, together with its financial and legal advisers, also undertook certain contingency planning to consider the possibilities and outcomes in the event that no viable solvent refinancing or restructuring solution in respect of the Bonds could be found.

In connection with this, the advisers to the Ad Hoc Committee had indicated that the Ad Hoc Committee would support, as a fallback option, a transaction whereby the Bondholders would acquire the group’s business and assets (but not, in particular, any of its liabilities in respect of the Pension Plan) through a pre-packaged administration sale. It was considered that, if insolvency was unavoidable, such a pre-pack would significantly reduce disruption to the business, thereby safeguarding value and maximising returns for the group’s creditors as a whole. It would also preserve the employment of some 2,000 members of Johnston Press staff.

Preparing for the pre-pack required detailed commercial planning, including a significant amount of coordination across the relevant group companies in Scotland, England and Northern Ireland, particularly as the pre-pack would need to be effected simultaneously on a company-by-company, asset-by-asset and contract-by-contract basis owing to the cross-guarantee granted by all material members of the group (other than Publications) to the Pension Trustees in support of the Pension Plan deficit and the group’s obligations under the framework agreement relating to it. Structuring the pre-pack on an operating-level basis was crucial to avoid the group’s liabilities in respect of the Pension Plan transferring to the Bondholders together with the group’s business and assets.

Over several months, management carefully considered the impact of placing each of the relevant companies into administration and the proposed pre-pack on the group’s material contracts and relationships with, among others, print, distribution and advertising customers; key stock and other core operational suppliers; landlords and other trade counterparties, such as the group’s bankers; ancillary (e.g., BACS and credit card) facility providers; and prospective partners with whom the group was engaged in ongoing negotiation of new commercial arrangements. It was also necessary to determine the most efficient and effective way to transition the group’s intellectual property ownership and day-to-day operation of its newspaper titles, tax grouping and other administrative and operational arrangements to a newly incorporated set of companies backed by the group’s Bondholders. In addition, owing to the nature of the group’s business, a comprehensive internal communications and external public relations strategy had to be developed to manage the flight risk of staff, a significant proportion of which comprised freelance journalists and a number of which were members of the Pension Plan (or other of the group’s occupational pension plans),^[4] the group’s relationships with trade unions and other industry representative bodies, political scrutiny as well as the anticipated high level of press coverage likely to be received by the group, and the consequential impact of this on its business operations, should there be no option but to file the group for insolvency.

This planning placed considerable pressure on internal business resource as it was required to be conducted alongside and without affecting the running of business as usual, including the execution by management of various cost-saving and other strategic initiatives designed to counter the headwinds of an industry in structural decline. Given the group’s public disclosure obligations and its staff composition, it was also necessary to keep the number of individuals involved in the planning to an absolute minimum.

This planning was further complicated by activist shareholder Christen Ager-Hanssen, who during the course of late 2017 and 2018 accumulated a 25 per cent stake in Johnston Press through his investment vehicle Custos, and who attempted to requisition an extraordinary general meeting of shareholders to remove most of the existing board and replace it with his own proposed candidates. Although Christen Ager-Hanssen was ultimately unsuccessful in his efforts to convene the meeting, his attempt to do so nevertheless caused disruption for the business, particularly as it was reported widely in the press and heavily debated on social media and trade union and other industry representative body websites.

Administration

End of strategic review

Having exhausted all options available to the group over the course of its 18-month strategic review, and owing to the outcome of the formal sales process in particular (including feedback from the advisers to the Ad Hoc Committee that the Ad Hoc Committee did not consider any of the offers received pursuant to the formal sales process to be sufficiently attractive compared to the fall-back option of a pre-pack, as described above), the directors, taking into account legal advice received, their fiduciary duties and wrongful trading considerations, finally concluded in the evening on Friday 16 November 2018 that there was no longer a reasonable prospect of the group avoiding insolvent liquidation or administration. They resolved to apply to the courts in Scotland, England and Northern Ireland for administration orders in respect of PLC and 41 of its subsidiaries.

Simultaneous applications to court

Having resolved to place the group into administration, and bearing in mind the group’s public disclosure obligations, which required the immediate announcement of the directors’ decision together with the fact that the valuation of the group implied by the offers received pursuant to the formal sales process had indicated that there was no value in the listed equity of PLC,^[5] the directors considered that the administration filings needed to be made urgently to protect the business. In particular, there were concerns that, if the proposed pre-pack was not announced before the markets opened the following Monday, the high level of press coverage likely to be received by the group would have an immediate adverse impact on the group’s trading relationships and staff, jeopardising the successful transition and continuation of the Johnston Press business going forward. In addition, there were hundreds of newspaper titles, both owned by the group and third parties but supported by the contract printing services of the group, due to be printed and distributed over the weekend, and it was in the interest of local, regional and national media as well as the general public to ensure that these could be printed and distributed as normal.

The directors filed simultaneous applications to the courts in Scotland, England and Northern Ireland overnight between Friday 16 and Saturday 17 November 2018, and judges in each jurisdiction were requested to conduct hearings out-of-court-hours and as early as possible the following morning to consider whether it would be appropriate to place the relevant companies into administration. To illustrate the urgency of the situation, for the relevant companies incorporated in England and Wales, which included Publishing as the primary operating member of the group, Publications as the owner of the profitable i newspaper and Bondco as the issuer of the Bonds, the hearing was convened in a conference room at the offices of the group’s legal advisers, with the judge dialling in to conduct the hearing via speaker phone.

By 2.30pm on Saturday 17 November 2018, the Scottish Court of Session, the High Court of Justice of England and Wales and the High Court of Justice of Northern Ireland had granted administration orders in respect of Johnston Press plc and 41 of its subsidiaries, and shortly thereafter at 2.45pm the group announced the completion of the pre-pack of its business and assets to a newly incorporated set of companies backed by the group’s Bondholders (the JPIMedia group).

Basis of insolvency

The applications were made on the basis that each relevant company was or was likely to become unable to pay its debts, as the value of its assets was less than the amount of its liabilities, taking into account its contingent and prospective liabilities. In light of the pressures facing the publishing industry as a whole, and given the persistent decline in revenues, the group did not expect to generate sufficient cash from its operations to be able to repay the Bonds in full upon their maturity in June 2019. Further, owing to the outcome of the strategic review, there did not appear to be any viable options for the solvent refinancing or restructuring of the Bonds.

As part of its contingency planning, the group had also commissioned independent desktop valuations of the enterprise value of the group (on a debt-free, cash-free, pension-free, going-concern basis) and its key assets (being, primarily, its intellectual property) to provide a frame of reference for the board when evaluating offers received pursuant to the formal sales process. The outcome of this work produced an enterprise value of the group within a range of £151 to £181 million, with the valuers concluding that £165 million, at the lower to middle end of that range, represented an appropriate valuation. Notably, this figure was lower than the total amount of principal outstanding Bonds. It was also greater than the highest indicative offer received pursuant to the formal sales process, but lower than the total consideration received by the administrators pursuant to the pre-pack, as described below.

In addition, as at close of business on Friday 16 November 2018, the bonds were trading at a deep discount to par, at approximately 56.1p/£, implying a market value of £123.4 million, indicating a value of the group less than the total amount of principal outstanding bonds.

Pre-pack

Structure and key terms

The pre-pack involved the simultaneous administration sale by each relevant company of its business as a going concern, and substantially all of its assets, to the JPIMedia group. As noted above, the transaction did not involve the transfer of any of Johnston Press’s liabilities in respect of the Pension Plan, nor did it involve the transfer of certain other liabilities and various non-core or onerous assets owned by the relevant companies in administration. However, it did involve the transfer of all Johnston Press employees pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006, thereby safeguarding the jobs of around 2,000 members of staff.

The consideration received by the administrators totalled £181 million and comprised:

• cash of £8 million, of which £4.7 million was received upon completion of the transaction, and of which the balance was to be paid to the administrators over the course of the following nine months depending on the level of costs and expenses incurred in the administrations of the relevant companies. To support the obligation of the JPIMedia group to pay the deferred cash consideration, the administrators took fixed charge security over a freehold property that was sold to the JPIMedia group pursuant to the pre-pack;
• a promissory note convertible to £85 million of debt instruments of the JPIMedia group (the Debt Note); and
• a promissory note convertible to 100 per cent of the equity of the JPIMedia group’s ultimate parent company (the Equity Note), valued at £88 million. ^[6]

Immediately following receipt of the consideration, the administrators directed that the Equity Note and the Debt Note be distributed to the security agent for the Bondholders as the group’s sole secured creditors, which the security agent further distributed to individual Bondholders in accordance with the non-cash distressed disposal provisions set out in the Intercreditor Agreement. The Equity Note and the Debt Note had an aggregate value of £173 million, thereby discharging an equivalent amount of principal outstanding Bonds owed by Bondco and guaranteed by the Guarantors.

The cash consideration received (or receivable over the course of the administrations) was permitted to be applied by the administrators only for the purpose of discharging certain costs and expenses of the administrations and for making prescribed part distributions to unsecured creditors, calculated in accordance with the statutory formula by reference to the floating charge recoveries in each of the relevant companies.

As a result of the pre-pack, the Johnston Press business, now operating under the name JPIMedia and led by a new board of directors, was able to continue trading with senior secured debt of a reduced amount of £85 million, maturing in December 2023, and entirely free of the Pension Plan deficit and certain other onerous liabilities. Certain Bondholders also provided a new money facility of £35 million to support the working capital requirements of the business.

Prescribed part leakage

As part of its contingency planning, the group had instructed its legal advisers to carry out a review of the security granted by the Guarantors in respect of the Bonds. This review confirmed the overall validity of the security. However, specific provisions in the Indenture and security documents meant that certain assets typically characterised as being subject to fixed charge security (such as intellectual property) were, in the special circumstances of the Guarantors, likely to be construed as subject to floating charge security, if they were sold for less than £5 million. Therefore, where usually the consideration received by administrators in respect of the sale of such assets (being fixed charge recoveries) would be distributed by the administrators to a company’s secured creditors, such that the consideration did not need to be in cash but could rather be provided in kind, in the case of Johnston Press, it was necessary for the consideration to be provided in cash and made available to unsecured creditors via prescribed parts in the administrations of each of the Guarantor owners of such assets.

As noted above, Johnston Press had commissioned independent desktop valuations of, among others, its intellectual property, including in particular each of the newspaper titles owned by the Agency Companies. These were conducted on a relief from royalty basis and did not consider the benefits of any synergies between titles or the centralisation of administrative and operational activities within the group, and were based on the revenue generated by the relevant newspaper title over the preceding 12 months, the level of financial contribution to the group and whether the relevant newspaper title had a long or short expected life span. The sum of the valuations for all of the newspaper titles owned by each Agency Company Guarantor was then used to determine the anticipated prescribed part in the administration of that company, to be funded by the cash consideration received by the administrators under the terms of the pre-pack sale and purchase agreement, as described above. Owing to the number of Agency Companies holding intellectual property, and based on the valuations commissioned by the group, it was anticipated that there would be prescribed parts in most of the Johnston Press administrations.

Conclusion

While Johnston Press’s comprehensive strategic review of its business did not ultimately yield a solvent refinancing or restructuring solution, its operating level pre-pack did enable the business to continue trading with a significantly deleveraged balance sheet, free of historic defined benefit pension liabilities and certain other onerous liabilities, and preserved the employment of some 2,000 members of staff.

From a legal practitioner’s perspective, the restructuring highlighted a number of unique challenges, including:

• the pressures faced by directors in managing the tension between diverse stakeholder interests in a no-default scenario, and the consideration of those interests while exploring all possible strategic options for placing the group’s business on a more stable footing for the future;
• practical steps to be taken when contingency planning for and implementing an operating level pre-pack across numerous group companies incorporated in multiple jurisdictions, particularly when undertaken against the backdrop of listed company public disclosure obligations and the nature of Johnston Press’s business and staff composition;
• coordination of simultaneous administration applications to courts in multiple jurisdictions on an urgent basis and out-of-court-hours to minimise the risk of business disruption and ensure as smooth as possible a transition of the business to new owners; and
• technical legal issues, such as evidencing balance sheet insolvency and structuring for cash consideration in the context of a debt-for-equity swap otherwise effected by way of credit bid.

Following completion of the pre-pack, Johnston Press continued to receive a high level of publicity, including discussion in both the House of Commons and the Scottish Parliament, with the Secretary of State for Digital, Culture, Media and Sport as well as politicians from all parties taking a broadly sympathetic and supportive position in relation to the restructuring.^[7] With regard to the Pension Plan, although Frank Field, chair of the House of Commons Select Committee on Work and Pensions, did raise enquiries with the Pensions Regulator regarding the entry of the Pension Plan into the PPF and whether this could have been avoided or required further investigation, the Pensions Regulator subsequently cleared the transaction, confirming in particular that it had found no evidence to support the use of any of its anti-avoidance powers and that an RAA (which, as noted above, might have enabled the group to avoid administration) would not have been achievable. This was achieved largely owing to the methodical process of pursuing all available options as well as carrying out detailed and comprehensive contingency planning.

The authors are not aware of any other examples of a full operating company pre-pack of the entire business executed by a listed company, although there are plenty of examples of ‘holding company’ or ‘share pre-packs’ by listed companies.

Notes