Leading regional publisher, Archant, headquartered in Norwich, has reached an agreement with Rcapital to invest in the business, contingent on the approval of a Company Voluntary Arrangement.
Like many other organisations across the sector, the impact of the COVID-19 pandemic on the Archant business has been profound. This has placed the business under immediate financial pressure, compounded by the significant deficit in its defined benefit pension scheme and the longer-term funding requirements necessary to meet the scheme contributions.
After exploring a number of options, including a sales process, the Board concluded that a CVA represents the best outcome for its creditors and other key stakeholders. Proposals are being put forward to creditors today.
As part of the restructuring process, the Pension Protection Fund will take on the Archant defined benefit pension scheme. The PPF will receive a significant payment under the CVA, materially better than it would have received in an Administration of the Archant Group, as well as the retention of a minority equity interest in the business.
The vast majority of creditors and all of the company’s employees will be unaffected by the CVA.
To fund the CVA, and to safeguard the future success of the business, Rcapital will acquire Archant’s main trading entity, Archant Community Media Limited (ACML) and inject capital and expertise into the business. The current holding company, Archant Limited, will enter into Administration.
- Company: Archant Community Media Limited
- Industry: Publishing
- Location: Norwich, operates nationwide
- Completion date: estimated October 2020 contingent on CVA approval
Simon Bax, Executive Chairman of Archant, said: “Before Covid-19, Archant was trading well and the management team were making excellent progress in executing a radical transformation of the business. Together with our Trustee and our adviser Western Pension Solutions, we were also making good progress in addressing the company’s considerable pension deficit. The unprecedented economic downturn of the past few months set that progress back considerably.
“Since the consequences of the pandemic became clear, we have worked towards a solution for Archant that gave the business the best possible chance for long-term success and made paramount the interests of our creditors, suppliers, customers and, of course, our employees.
“Today’s announcement marks a new chapter in Archant’s history. With the backing of our creditors, the route we have secured will see us move forward with a new owner who is incredibly supportive of our strategic direction, respectful of our heritage, and committed to enabling us to continue our journey in the creation of a profitable model for local media.”
“We are incredibly pleased to have worked alongside Archant’s management team and KPMG to put forward a plan that will restructure finances and inject fresh capital into one of Britain’s oldest local newspaper brands. We are hopeful, that with the support of its creditors, Archant will emerge from this challenging period as a stronger business that continues to provide a vital service to its clients and readership. Today’s announcement marks an exciting next phase for both Archant and Rcapital – I am looking forward to working with Simon and his team to deliver on the transformation plan.” commented Chris Campbell, partner at Rcapital.
Chris Pole, partner at KPMG and proposed nominee of the CVA, added: “Archant has a proud heritage stretching back more than 170 years, publishing a number of titles and websites that lie at the cornerstone of regional communities.
“If approved, the CVA proposal represents an opportunity for the business to move forward on a more sustainable financial footing, with new investors who are committed to backing the transformation plan already underway.”
Archant needs to secure at least 75% creditor approval by value for the CVA for it to proceed. Detailed proposal documents will be made available to creditors via a dedicated website. Consultations have already taken place with key creditors, and KPMG will spend the coming weeks in further talks with them to ensure they understand the full detail of the proposal.
Archant was advised by KPMG and Mills & Reeve. Rcapital was supported by legal advisers Squire Patton Boggs LLP and senior funding for the transaction is being provided by Secure Trust Bank.