Judge approves Reach finance proposal weeks after job cuts announcement
Judge Sally Barber gave Reach the green light for a ‘cancellation’ of its ‘share premium account’ at a court hearing in London.
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Your support makes all the difference.A judge in a specialist court has approved a financial move proposed by Daily Mirror publisher Reach, weeks after the group announced job cuts.
Judge Sally Barber gave Reach the green light for a “cancellation” of its “share premium account” at an online hearing in the Insolvency and Companies Court on Friday.
A lawyer representing Reach outlined the proposal and Judge Barber said she was satisfied that there was “no real likelihood” of the company being “unable to discharge” debts when they fell due.
The company, which also owns the Express newspapers, the Daily Star and regional newspapers across the UK, including the Manchester Evening News, had recently advertised the proposal to shareholders.
The proposed reduction of capital will not involve any payment or return of capital to shareholders or any change in the company’s dividend policy
Reach had said, in a notice published online, that the purpose of the “reduction of capital” was “to give reasonable assurance” that the company would be able to continue to make “distributions to shareholders”, as considered appropriate and in accordance with a dividend policy and commitments to the group’s pension trustees.
“The proposed reduction of capital will not involve any payment or return of capital to shareholders or any change in the company’s dividend policy,” the notice said.
“The proposed reduction of capital would result in the cancellation of the balance standing to the credit of the company’s share premium account (£605.4 million) and the creation of distributable reserves of the same amount.”
Earlier this month Reach announced the axing of about 450 jobs.
The company said the job losses came under plans to trim operating costs by 5%-6% in 2024.
Reach had previously announced two rounds of job cuts in January and March.
The group said the extra savings would help it invest in boosting its online offering.
In July Reach announced tumbling half-year profits after suffering a hit to digital sales from a move by Facebook to change the way it displays news content.
Reach reported underlying operating profits plunging by nearly a quarter, 23.5%, to £36.1 million, due to the knock to its revenues as well as soaring costs.
Statutory pre-tax profits fell to £6.7 million from £32 million a year ago.