B2B publisher Incisive Media’s CEO Tim Weller has come out fighting after reports that the company is expected to breach — or may have already broken — its banking covenants and could be bailed out by its owner, private equity firm Apax Partners. In a memo to staff, obtained by paidContent:UK, Weller admits the company is under pressure and concedes 2008 profits “dipped below the level agreed” with its bank when it took out a loan in 2006 as part of the Apax buy-out. An experienced “advisory team” is looking into ways out of the debt problem.
Weller paints his company as a victim of the economic crisis and says “myriad” other companies in the media and elsewhere are going through the same thing. Weller says Incisive remains profitable and expects the business to “bounce back quickly when things turn for the better, as they surely will.” Though quite when Weller expects this to happen is unclear.
Read the full memo after the jump…
You may have seen this morning’s coverage about Incisive Media in the FT which has mentioned that the UK side of the Company is not expected to meet the current tests on its banking covenants. I would like to update you on where we are and to reassure you by explaining what this all means.
Incisive Media, as you know, is a great business with leading brands in its chosen markets but we are currently under revenue pressure due to an unprecedented set of economic circumstances and their impact on our end markets. As a result, the UK 2008 profits dipped below the level agreed with the bank when we took on our loan in 2006 as part of taking the company private.
It is important to note that the issues we face in our markets and with our lenders are no different to those faced by a myriad of other businesses in the current climate (in the media sector and other sectors). It is also important to emphasise that the issues being talked about in the press are purely financing issues centred on the UK Company’s balance sheet and the amount of debt the UK business has. The US has a separate financing agreement. Our businesses continue to be very profitable and cash generative at the operating level. In that sense, it is business as usual and it is important that we remain focused and committed to our day-to-day roles and concentrate on hitting our 2009 budget.
We expect the Group to emerge from these difficulties in a stronger position with a sound platform for future growth as the market recovers and we resolve our financing issues. As James, Bill and I have mentioned before and experienced in the past, the nature of our business means that just as it can suffer in the downturn as advertisers tighten their belts so it will bounce back quickly when things turn for the better, as they surely will.
We are confident that our shareholders and the lenders will be supportive of the Group while it addresses the UK financing issue. We are driving the process pro-actively to get to a satisfactory solution and are working with an experienced advisory team to assist and guide us through the process.
I reiterate again that Incisive Media is a sound business, certainly with challenges, but with everyone working together we will emerge stronger from this.
I will keep you updated as the process moves forward. In the meantime, thank you for your support and continued hard work.
If you have any questions please don’t hesitate to contact me.