Polestar to restructure debt

According to a report an Investcorp-backed printing company may write off up to £300m of its debt as part of a restructuring.

Polestar, a printing group backed by Bahrain-based merchant bank Investcorp, is reportedly in discussions with its lending banks to write off up to £300 million as part of a restructuring.

The write-off is understood to be part of a debt-for-equity swap plan that is likely to be presented to shareholders and creditors next month, according to a report in UK weekly The Sunday Times.

The group of banks includes Deutsche Bank, JP Morgan, Royal Bank of Scotland and fund-management group Blue Bay.

According to newspaper, Polestar is thought to have debts of about £500m. Of these about £100m is thought to be worthless. However, a £109m tranche of debt is trading at between 5% and 8% of its face value and another £295m bond tranche is trading at 70% of its value.

Polestar is one of Europe’s biggest printers, producing more than 42 million magazines and newspaper supplements each week, including UK titles such as Now, TV Times, Woman, Woman’s Own, Country Life and the Radio Times.

The group was created in 1998 by Investcorp in a an £810m leveraged buyout.
Though Polestar is expected to make a profit of about £60m this year, it is understood to have been forced to start discussions with its banks earlier this year.

It has appointed Close Brothers, a UK investment bank, to advise on a debt restructuring deal.

The report said Investcorp advisers, including Thomas Middelhoff, chief executive of German retail group Karstadt Quelle, stepped down as directors of Polestar’s main operating company in September.

At a meeting in September, Polestar is believed to have told its banks that its future could depend on the debt restructuring deal being agreed. However, sources close to the talks have played down the chances of Polestar going bust, the paper said.

Polestar has had problems in the past. In 2001 it restructured its debt and as recently as 2004 Investcorp invested an additional £74 million as part of a debt restructuring and “ongoing investment programme”.

Investcorp and Close Brothers were not immediately available for comment.