UK-based European newspaper owner, Mecom, has sold its titles in Germany to one of that country's oldest publishers for €152m ($204m), Financial Times has reported.
The company, which is chaired by David Montgomery, former chief executive of the Mirror Group, is burdened with net debt of about €650m and has been in danger of breaching its banking covenants. It should, however, scrape through the next test of those levels following the proposed sale, according to one analyst.
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M. DuMont Schauberg, which is based in Cologne, on January 12 bought the Berliner Zeitung, Hamburger Morgenpost and several other titles from Mecom at a price that has fallen in recent weeks from about €165m.
The titles being sold contributed about €20m of Mecom's estimated €163m of earnings before interest, tax, depreciation and amortisation last year.
Simon Davies, a media analyst at RBS, calculated that if Mecom realised a net £125m ($185m) from the sale of the German business, its net debt/ebitda ratio would fall to just under the 3.5 times necessary to honour its bank covenants, which will be applied at the end of February. However, it could still breach the covenants at the end of June.
Mecom has also been involved in informal discussions over the sale of its businesses in Norway and Poland, which analysts have estimated to be worth between €400m and €460m in total.
The company has other newspaper and magazine titles in Denmark, which are loss-making, and the Netherlands, where it has invested heavily in restructuring the business.
M. DuMont Schauberg is a family-owned business that traces its publishing roots back to 1620.
