The Herald newspaper is today claiming that when Scotsman publisher, Johnston Press …“grappled with its banking covenants 18 months ago”, it promised finance director Stuart Paterson a £250,000 retention bonus if he stayed with the company through to January 2011.
Yesterday, as reported by allmediascotland, the publisher announced that Paterson had “resigned to pursue another business opportunity”. Paterson, 52, has been with Johnston Press – which also publishes Scotland on Sunday and the Edinburgh Evening News – for nine years. He is due to leave in March.
According to The Herald’s business writer, Simon Bain: “When Johnston’s former chief executive Tim Bowdler announced his resignation in December 2007, Mr Paterson was seen as a strong candidate to succeed him, but John Fry was lured from rival Archant to take the job.”
Under the headline, 'Paterson to leave Johnston Press after rollercoaster decade', Bain reports that Paterson earned £655,000 last year, including bonuses worth £292,000, and holds 245,123 shares in the company.
Bain writes: “Within a year of succeeding veteran finance director Marco Chiappelli, Mr Paterson was signing Johnston’s biggest-ever deal when it landed Yorkshire Post group Regional Independent Media for £560 million, seen at the time as a lower price than it might have paid two years earlier. Mr Paterson said at the time: ‘We are now the largest purely regional media group and this is our third major deal in the last six years. There’s more to come’.
“In 2004, Mr Paterson won the Finance Director of the Year accolade and the following year he helped engineer a £155 million deal to buy Scottish Radio Holdings’ Irish newspaper group, Score Press, from under the noses of rivals who complained at the lack of an auction. However, by early 2009 the deal had turned sour as the Irish economy crumbled, and Johnston failed in an attempt to offload the titles to avoid breaching its banking covenants.
“The rot had started in early 2008 as advertising nosedived and the group was forced into a £212 million rights issue. Earnings of £184 million were struggling to cover debts of £684 million, and the shares, 350p in 2007, had plummeted to 6p.
“In March last year Johnston warned of ‘going concern’ uncertainties, but Mr Paterson said he was confident the group’s reduced £421 million of borrowings could be renegotiated. In August last year the refinancing was agreed, on a doubled borrowing cost of ten per cent and a £15 million arrangement fee.
“In March this year Mr Paterson said a dividend would be restored when debt came back down to four times earnings, and in August he said advertising break-even was close.”