London-based Rcapital Partners is to acquire a 90% stake in Archant, the troubled UK eastern local news publisher. In a pre-packaged insolvency arrangement (“pre-pack”), the government’s support fund assumes responsibility for most of the company’s crippling pension deficit, gets a “significant” payment and also 10% of the “new” company’s equity. Existing shareholders in the family-owned company will receive no payment.
Archant publishes the Eastern Daily Press, East Anglian Daily Times, and the New European along with 50 weekly news titles, 30 regional magazines (which have been generating most of the company’s EBITDA) and 12 special interest brands.
In 2018, Archant had revenues of £87m but incurred losses (after hefty pension fund repayments) of almost £8m. It was sunk by:
- Covid-19 which has shredded advertising – and wiped out the profitability of a company whose revenue had been 50% ads
- The flagship Eastern Daily Press has lost 70% of its copy sales since 2000
- Even pre-Covid, Archant’s profitability had been squashed by a pension deficit that may now be £50m
Archant was founded in 1845 and continues to operate from its Norwich base in the UK’s eastern counties. The deal is subject to 75% approval by creditors which themselves will only receive a small proportion of their oustanding debt.
The Rcapital deal beat National World Plc, the listed vehicle created by UK newspaper veteran David Montgomery to acquire traditional news brands. He will be hungry to do that first deal and might now have his sights set on persuading Gannett to sell its UK subsidiary Newsquest (which was itself reportedly in the bidding for Archant). Or might Montgomery be trying to persuade Reach Plc to divest some of its print-heavy portfolio? Or perhaps the (more pricey) Telegraph Media Group? Keep watching.