Good morning!

No time for a preamble today, as I have to rattle through this report as quickly as possible, due to an urgent dentist appointment at 11:45 this morning - half a molar sheared off last week, but thankfully it's not (yet!) exposed the nerve, but I need to get it fixed pronto, and this was the only time they could fit me in.

Johnston Press (LON:JPR)

Share price: 119p (down 16% today)
No. shares: 105.9m
Market cap: £126.0m

Trading update - as regular readers here will know, I've been bearish on this newspaper group for years - because not only is the obvious structural decline of newspapers likely to be terminal within (say) ten years, but also because (unlike Trinity Mirror (LON:TNI) which has cleared its historic debt) JPR is still saddled with possibly insurmountable debts.

True, it refinanced in mid-2014, but the way I look at it, the investors who poured fresh equity into it were mugs, who hadn't done their sums correctly. Even after the fundraising, the last reported balance sheet (at 3 Jan 2015) shows net tangible asset value which is heavily negative, at -£314.3m if you just write off the £514.3m intangible assets, although it's possible that the £81.4m deferred tax liability might relate to intangibles, so if we write that off too, then NTAV is still negative, at -£230.8m. There could be some upside on the freehold property values, but I doubt if the fixed assets' book value of £53.3m is understated enough to close the shortfall.

The pension deficit requires recovery payments in cash of £10m in 2016, rising 3% thereafter until the final payment of £12.7m in 2024, so that's a significant drain on cashflow. Plus the considerable debt has been a large drain on cashflow, just to service the interest, let alone repay the capital.

The latest bonds were issued in May 2014, and are senior secured notes, with a coupon of 8.625%, so that's an annual interest bill of £19.4m for those, which mature in 2019 I believe. Will the company be able to cover the interest costs, the pension fund overpayments, and build up a war chest of £225m above that to repay the capital by 2019? I very much doubt it, because the core business is in terminal decline.

Today's update confirms the continued structural…

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