Discussions surrounding our potential involvement with newspaper and magazine group, Archant, started in June 2020. The business had a strong trading history but suffered from the economic fall-out from Coronavirus with declining advertising revenue and newspaper sales. Their situation was worsened by a legacy defined benefit pension scheme which had a significant shortfall, meaning that they could not meet the required payments as trading weakened.
When we met Archant’s management team and advisers, they had already undergone an extensive transformation programme to take the business from a traditional publisher to full-service agency. However, in spite of these efforts, Archant had a short-term cash requirement due to Covid, so we worked quickly with KPMG and management to build up a funding option that would safeguard the business in the longer-term. Our involvement and investment followed a competitive process where a number of parties put forward options which included a pre-pack Administration process. We believed that a CVA presented a better alternative for both creditors and the business to continue trading.
Agreeing a plan that everyone would back was not without its challenges! We took a collaborative and consultative approach with all of the various stakeholders including; the Pension Protection Fund (PPF), pension trustees, key creditors, the board and the board’s advisors. Within a relatively short period there was a detailed CVA plan that everyone could support, with the process led by KPMG. It also meant there would be no job losses and the majority of creditors would be protected from material losses.
As a result of the deal, the PPF ended up with an equity stake in the business and a position on the Board, working alongside Rcapital and the management team. This was a complex deal in structure and stakeholder mix which demanded a team of advisers with a shared vision, committed to achieving a positive outcome.
Once the CVA had completed unchallenged, we finalised the acquisition and the business was refinanced with a combination of funding from Rcapital and Secure Trust, who provided an asset based working capital facility after a highly competitive process.
Matt Broomfield, Regional Sales Director at Secure Trust Bank Commercial Finance, commented: “Having worked with the team at Rcapital for a number of years, we used our strong relationships to support this deal. Archant has a fantastic heritage and management team behind it and has shown enormous resilience in the face of recent financial uncertainty. The flexible funding facility we have provided will enable Archant to strengthen its finances and help Rcapital achieve its growth plans.”
“We will support Archant with the expertise of our portfolio operators to scale its successful brands and capitalise on the great work that has already been done to develop the future digital agency proposition. We are very optimistic that Archant will emerge from this challenging period as a stronger business that will continue to provide a vital service to its clients and readership.” Chris Campbell, Partner at Rcapital.
Transaction Advisers: KPMG LLP, Mills & Reeve LLP, Squire Patton Boggs LLP, Dalriada Trustees, Smith & Williamson and Gowling WLG.