Tony O'Reilly Gets the Push: Independent Stock 'soars'

ButlerReport, Yahoo! Contributor Network
Mar 16, 2009 "Share your voice on Yahoo! websites. Start Here."

Tony O'Reilly, referred to as 'Sir Anthony" by his own newspaper the Irish Independent, stepped down last week as the CEO of the Independent News & Media (INM).

The stock market responded by boosting share prices 67 percent to 17 cents, compared with a year high of €2.43 per share. This puts a market capitalization of €142.5 million on a business with €1.4 billion in debt. INM has faced a turbulent time lately, with its market value fluctuating down from €820 to €38m in 18 months before this latest rebound.

O'Reilly, dropped this year from the Forbes billionaire list, lost large amounts of his and his in-laws wealth on gambling to save the sinking Waterford Wedgewood. According to the British Guardian Newspaper, O'Reilly, chairman of the 250-year-old fine china and glassware firm, has over the past five years invested €400m (£375m) in the firm along with his brother in law, Peter Goulandris, and private equity investment fund Lazard Alternative Investments. Sources believe that when the firm went under, taking a sizeable chunk of his fortune with it, O'Reilly realised that he did not have the resources for a bailout at INM.

The Independent Group is facing a €200 million loan repayment looming in May. A total of E590 million in debt repayments are due over the coming year.

Unable to sell assets the company is faced, as are its banks, with a decision about the viability of refinancing. Revenues from advertising have been falling steadily in line with the plight of major newspaper groups worldwide although it is reported that some of the business units are providing profits.

O'Reilly with a 28% stake and Dennis O'Brien with 25% have lost hundreds of millions of Euros in the Independent Group under O'Reilly's leadership as the stock price got hammered loosing 95% of its value. O'Reilly's son Gavin has been appointed the new CEO, a move welcomed by banks and shareholders. Two other O'Reilly family members also stepped down from the board which is being reduced from 17 to 10 in the coming months.

The company has been trying to offload assets to meet the upcoming bond repayment but has been unable to do so. Refinancing, if able, will be an expensive proposition.

Given the economic mess the business community finds itself in and Independent Group battered stock price and its inability to offload assets, outlook is far from rosy. O'Reilly may have to write a check, as he did so often when chasing Waterford, to cover the shortfall assuming he has funds available to do so and is willing to part with the cash.

An ardent critic of Sir Anthony, Mr. O'Brien called on him to retire as chief executive and relentlessly criticized the company over the past years, his voice largely ignored until the emergence of the latest debt crisis and pressure from two Irish Banks Allied Irish and Bank of Ireland.

In parting remarks to O'Reilly the company Chairman Dr Brian Hillery mentioned, "When Tony first invested in a local Irish newspaper operation back in 1973, it had a turnover of €12 million. From that starting point, he immediately applied - with his colleagues - his flair, vision and enormous energy to create a €1.5 billion worldwide communications group."

Hillery neglected to mention that the newspaper is laden with debt nearly equal to the value he put on the group, a fact that did not go unnoticed in the marketplace. The board named O'Reilly president emeritus.

Note: British titles of nobility are not officially recognized in Ireland and the United States.

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