Johnston Press : Disposal Agreement

16 December 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

Johnston Press plc (the 'Company')

Proposed disposal of 13 publishing titles and associated websites in East Anglia and East Midlands for £17 million

Further to the announcement on 14 November 2016, Johnston Press plc (the 'Company' and, together with Johnston Press plc's subsidiary undertakings, the 'Group') is pleased to announce that its subsidiary, Johnston Publishing Limited, has entered into a conditional agreement to sell the entire issued share capital of Johnston Publishing East Anglia Limited, which, following the transfer of the business described below, will hold 13 publishing titles and associated websites in East Anglia and the East Midlands (the 'Titles'), to Iliffe Media Limited (the 'Disposal Agreement') for cash consideration of £17.0 million (the 'Disposal'). The Disposal is conditional on shareholder approval.

Members of the Group intend to enter into agreements to transfer certain assets, property and rights which relate to the carrying on of newspaper publishing and other commercial activities directly related to the publication of the Titles (and their associated websites) (the 'Business') to Johnston Publishing East Anglia Limited (the 'Business Transfer Agreements') prior to completion of the Disposal ('Completion').

The Disposal is in line with the Group's previously stated strategy to focus its business on core titles in selected geographic markets with a view to reducing net debt.

Transaction Highlights

· Johnston Publishing East Anglia Limited is to be sold for cash consideration of £17.0 million payable on Completion, subject to adjustment for the apportionment of certain items of income and expenditure relating to the Titles

· The Group is expected to receive net cash proceeds of approximately £16.0 million from the Disposal after deductions, fees and other transaction costs

· The consideration of £17.0 million represents a 5.3x multiple of operating profit of £3.2 million before exceptional expenses for the 52 weeks ended 2 January 2016

· The Business, which will be transferred to Johnston Publishing East Anglia Limited prior to Completion by way of the Business Transfer Agreements, consists of:

o the Titles and related intellectual property rights;

o the goodwill associated with the Titles;

o the benefit (subject to the burden) of certain trading contracts; and

o other assets, property or rights relating exclusively or principally to the Business

Transaction Rationale

· The Disposal progresses plans to focus Johnston Press' business on its selected geographic markets, audience profile and digital growth

· The net proceeds from the Disposal will reduce the Group's net debt and will be used for general corporate purposes in line with the Group's strategy

Ashley Highfield, Chief Executive of Johnston Press plc said:

'This disposal marks a major milestone in our divestment strategy and puts us firmly on the path of refocusing our activities on areas with the greatest growth potential. The Disposal will also reduce our net debt whilst putting us on a stronger footing.

I would like to thank the staff based at these Titles for their hard work and loyalty over the years and we wish them well for a successful future.'

Circular and General Meeting

A circular containing a notice convening a general meeting to consider and, if thought fit, approve the Disposal will be sent to Shareholders (the 'Circular') as soon as reasonably practicable, and, subject to such approval, completion of the Disposal is expected to take place during January 2017.

Market abuse regulation

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

For further information please contact:

Johnston Press
Ashley Highfield, Chief Executive Officer	020 7612 2601
David King, Chief Financial Officer	020 7612 2602
Bell Pottinger
Dan de Belder	020 3772 2561
Henry Lerwill
Panmure Gordon (Sponsor and Joint Broker)
Dominic Morley / Andrew Potts / Alina Vaskina (Corporate Finance) Charles Leigh-Pemberton (Corporate Broking)	020 7886 2500
Liberum (Joint Broker)
Neil Patel	020 3100 2000
Ingenious Corporate Finance (Financial Adviser)
Toby Ramsden	020 7319 4159
Graham Smith	020 7319 4162

Notes to Editors

The 13 publishing titles and associated websites in East Anglia and East Midlands subject to the Disposal are the Bury Free Press, the Local (Bourne), Diss Express, Fenland Citizen, Lincolnshire Free Press, Grantham Journal, Haverhill Echo, Lynn News (Tuesday and Friday), Newmarket Journal, Rutland Times, Suffolk Free Press, Spalding Guardian and Stamford Mercury.

Proposed disposal of 13 publishing titles and associated websites in East Anglia and East Midlands for £17 million

Introduction

Johnston Press plc (the 'Company' and, together with Johnston Press plc's subsidiary undertakings, the 'Group') today announces that its subsidiary, Johnston Publishing Limited, has entered into a conditional agreement to sell the entire issued share capital of Johnston Publishing East Anglia Limited to Iliffe Media Limited ('Iliffe Media') for a cash consideration of £17.0 million. The Companyalso announces that Johnston Publishing Limited, East Midlands Newspapers Limited, Anglia Newspapers Limited and Johnston Publishing East Anglia Limited intend to enter into agreements to transfer certain assets, property and rights comprising the Business to Johnston Publishing East Anglia Limited (the 'Business Transfer Agreements') prior to Completion of the Disposal.

In view of its size in relation to Johnston Press plc, the Disposal constitutes a Class 1 transaction for Johnston Press plc for the purposes of the Listing Rules and will therefore require the approval of Shareholders. The Circular containing further information on the sale of Johnston Publishing East Anglia Limited, as well as a notice convening a general meeting to approve the Disposal (the 'Disposal Resolution'), will be sent to Shareholders as soon as reasonably practicable.

Background to and reasons for the Disposal

The Group has previously stated its plans to focus its attention on core geographic areas within its business. As part of this strategy, the Group is exploring the disposal of certain assets with a view to reducing net debt.

As announced in its trading update on 19 January 2016, the Group has reviewed its portfolio and has identified a number of newspaper brands and publishing assets that it does not consider to be strategic priorities, particularly those that (i) fall outside its selected geographic markets; (ii) do not match its audience profile; or (iii) do not offer the levels of digital growth sought by the Group.

In determining which assets should be divested, the Group has considered which of its assets are the most self-contained, favouring those that are less reliant on the Group's central support services and that are in a clearly defined geographic area. This process has led to the identification of the Business as a suitable asset for disposal.

Following the Disposal, the Group will have reduced net debt, improved liquidity and be more geographically concentrated, which the Board believes will enable the Group to benefit from, and implement, Group-wide initiatives more easily.

Information on Johnston Publishing East Anglia Limited

The Business consists of 13 print titles and these titles' associated websites, which cover news and information for local geographies in East Anglia and the East Midlands. The Group believes that the distinct and geographically contained locations of the Business mean that the Disposal can be effected with less disruption and cost for the Group than the sale of other Group assets. No key Group individuals or functions are departing the Group as a result of the Disposal.

The titles held by the Business are the Bury Free Press, the Local (Bourne), Diss Express, Fenland Citizen, Lincolnshire Free Press, Grantham Journal, Haverhill Echo, Lynn News (Tuesday and Friday), Newmarket Journal, Rutland Times, Suffolk Free Press, Spalding Guardian and Stamford Mercury. These include a combination of weekly and twice weekly publications as well as a mixture of paid and free titles. From 1 January 2016 to 30 November 2016, the Titles had an average monthly circulation of 455,992 copies (unaudited) and their associated websites had an average monthly active user base of approximately 718,844 visitors (unaudited).

Summary of financial information of the Business

For the 52 weeks ended 2 January 2016, revenues attributable to the Business were £11.9 million out of the total revenues for the Group of £245.1 million, and operating profit after exceptional expenses and before net financing and tax costs were £3.1 million out of the operating profit after exceptional expenses and before net financing and tax costs for the Group of £1.0 million. As at 2 January 2016, the gross assets attributable to the Business were £1.9 million out of the total gross assets for the Group of £607.6 million

For the 26 weeks to 2 July 2016, revenues attributable to the Business were £5.5 million out of the total revenues for the Group of £114.2 million, and operating profit after exceptional expenses and before net financing costs and tax costs were £1.6 million out of the total operating loss after exceptional expenses and before net financing costs and tax costs for the Group of £211.4 million. As at 2 July 2016, the gross assets attributable to the Business were £1.8 million out of the total gross assets for the Group of £379.9 million.

Further financial information on the Business will be set out in the Circular.

Use of Proceeds and financial effects of the Disposal

The Group is expected to receive net cash proceeds of approximately £16.0 million (after deductions, fees and other transaction costs) from the Disposal.

The net proceeds from the Disposal will reduce the Group's net debt and will be used for general corporate purposes in line with the Group's strategy. As at 2 July 2016, the Group's net debt was £137.7 million based on a mark-to-market value. The nominal value of bonds outstanding at 2 July 2016 was £220 million. Following the Disposal, the Retained Group's pro forma net debt, calculated as if the Disposal had taken place as at 2 July 2016, would be £121.7 million, based on mark-to-market value.

Given its modest size and geographical reach the Business currently only makes limited use of central Group resources. It is expected that there will be limited impact upon the Retained Group's central cost base following the disposal of the Business.

It is expected that the Disposal will have a dilutive effect on the Group's earnings in the 2017 financial year.

The Disposal will not require any payment to the Johnston Press Pension Plan in addition to the existing contractual commitment to pay £10.3 million in 2017.

The Disposal will not require any pre-payment or other redemption of the Bonds.

The Disposal does not constitute an adjustment event necessitating an adjustment to the number of Warrants in issue.

Further financial information on the financial effects of the Disposal will be set out in the Circular.

Principal Terms of the Disposal

Under the terms of the Disposal Agreement, Iliffe Media will acquire the entire issued share capital of Johnston Publishing East Anglia Limited. The Business, which will be transferred to Johnston Publishing East Anglia Limited prior to Completion by way of the Business Transfer Agreements, comprises:

(a) the Titles and related intellectual property rights;

(b) the goodwill associated with the Titles;

(c) the benefit (subject to the burden) of certain trading contracts; and

(d) other assets, property or rights relating exclusively or principally to the Business.

Johnston Publishing East Anglia Limited is to be sold for cash consideration of £17.0 million payable on Completion. For the 52 weeks ended 2 January 2016, the Business had operating profit after exceptional expenses and before net financing and tax costs of £3.1 million. The consideration of £17.0 million represents a 5.3x multiple of operating profit before exceptional expenses of £3.2 million for the 52 weeks ended 2 January 2016. Completion is conditional upon the approval of the Disposal by Shareholders through the passing of the Disposal Resolution, and the Group transferring the Business from the Retained Group to Johnston Publishing East Anglia Limited in accordance with the terms of the Business Transfer Agreements.

Further details of the Disposal and a summary of the principal terms of the Disposal Agreement, Business Transfer Agreement and a Transitional Service Agreement ('TSA') between Johnston Publishing Limited and Iliffe Media Publishing Limited will be set out in the Circular.

Current trading, financial position and future prospects of the Retained Group

Current trading

On 4 August 2016, the Company announced its unaudited interim results for the 26 week period ending 2 July 2016. Financial highlights included revenue of £114.2 million (H1 2015: £128.9 million), pre-tax loss of £183.7 million (H1 2015: £2.2 million), loss from continuing operations before tax and finance costs of £211.4 million (H1 2015: £22.2 million profit), net debt of £137.7 million (H1 2015: £183.1 million), diluted adjusted earnings per share of (140.56p) (H1 2015: 1.36p). Key operational highlights included digital audience growth, the acquisition of the i newspaper, the bedding in of the 'Newsroom of the Future' and 'SalesForce of the Future' programmes, the launch of 19 new fully responsive websites and mobile apps for Johnston Press' priority titles and the sale of Johnston Press' titles on the Isle of Man for £4.25 million, which was announced on 4 July 2016 and completed on 18 August 2016.

On 10 November 2016, the Company announced a trading update for the 17 weeks to 29 October 2016. Total adjusted group revenues year-on-year for that period were down 5.1 per cent. Excluding the i newspaper, adjusted like for like revenues declined 16 per cent. for the 17 week period. This adjusted historical financial information has been extracted from internal management accounting records and is unaudited. The basis on which this financial information has been prepared is set out in more detail in the Circular.

Key operational highlights announced on 10 November 2016, include growing circulation volumes from the i newspaper, digital advertising revenues (excluding classifieds) returning to growth in October 2016 and continued audience growth.

Trading conditions continue to be challenging, with year-on-year advertising revenues (excluding the i newspaper) in November and December (month to date) declining broadly in line with those in the 17 weeks to 29 October 2016.

Financial position

On 4 August 2016, Johnston Press plc published its interim report for the 26 weeks ended 2 July 2016 in which it stated that it would seek to review its Super Senior Revolving Credit Facility (the 'Facility'), which matures on 23 December 2018, with its lenders to ensure it continues to meet the needs of the business.

On 4 October 2016, the Group announced that it had agreed changes to certain terms of the Facility with its lenders, with those changes becoming effective from 3 October 2016 until 31 December 2016. Following these changes, the total commitments made available under the Facility have been reduced from £25.0 million to £12.5 million. In addition, the lenders agreed to waive the consolidated leverage ratio covenant test for September 2016 so that the next covenant test date would be as at 31 December 2016.

The Group's current Facility remains undrawn. The Group has reached a non-binding agreement with its lenders on amended terms to the Facility that would provide the Group with an amended revolving credit facility of £10.0 million, such amount reducing over time until 30 June 2018 (the 'Proposed Facility'). The interest rate under the Proposed Facility shall be 5.0 per cent. per annum plus LIBOR. It is expected that the Proposed Facility will be signed by 31 December 2016.

If the Proposed Facility is agreed and (i) Shareholders vote in favour of the Disposal Resolution to be proposed at the General Meeting; and (ii) the Group completes the Disposal, then it is envisaged that the Proposed Facility would be cancelled on Completion.

If the Proposed Facility is agreed and Shareholders do not vote in favour of the Disposal Resolution to be proposed at the General Meeting or if the Disposal otherwise does not complete, it is envisaged that the

Proposed Facility would remain in place until 30 June 2018, tested against revised leverage ratio covenants (tested quarterly), with an obligation to prepay and cancel the Proposed Facility with 75 per cent. of net cash proceeds of any disposals outside of the ordinary course that the Company receives on

or prior to 31 December 2016 and 100 per cent. of net cash proceeds of any subsequent such disposals thereafter.

There is no guarantee that the Proposed Facility will be entered into by 31 December 2016. Unless the lenders under the existing Facility grant a further waiver, the Company would then be in default of its existing Facility and the Lenders would then have the option to cancel the facility, which is currently undrawn. The Company also has an option to cancel the current Facility at any time on three business days' notice.

Future prospects

Following the Disposal, the Retained Group intends to continue to pursue its stated strategy to deliver improved performance by concentrating on growing its audiences and advertising revenues. The Retained Group also plans to continue its focus on the i newspaper, acquired in April 2016, and in particular, to develop its advertising revenues and digital presence.

Expected timetable to Completion

The Circular, containing further details of the Disposal, the Disposal Resolution, the Board's recommendation and the notice of general meeting, will be sent to Shareholders as soon as reasonably practicable. Completion is expected to occur in January 2017.

Definitions

The following definitions apply throughout this announcement:

'Board'	the directors of the Company as at the date of this announcement;
'Business'	such part of Johnston Press plc's business as relates to the carrying on of newspaper publishing and other commercial activities directly related to the publication of the Titles, being the business to be transferred to Johnston Publishing East Anglia Limited pursuant to the Business Transfer Agreements;
'Business Transfer Agreements'	the agreements between Johnston Publishing Limited, East Midlands Newspapers Limited, Anglia Newspapers Limited and Johnston Publishing East Anglia Limited pursuant to which the Retained Group will transfer the Business to Johnston Publishing East Anglia Limited;
'Company'	Johnston Press plc;
'Completion'	the completion of the Disposal in accordance with the terms of the Disposal Agreement;
'Disposal'	the proposed disposal of the entire issued share capital of Johnston Publishing East Anglia Limited;
'Disposal Agreement'	the conditional agreement between Iliffe Media and Johnston Publishing Limited relating to the transfer of the entire issued share capital of Johnston Publishing East Anglia Limited;
'Disposal Resolution'	the ordinary resolution to be proposed at a general meeting of the Company to approve the Disposal;
'Facility'	Johnston Press' Super Senior Revolving Credit Facility;
'Group'	the Company and its subsidiary undertakings;
'Listing Rules'	the listing rules made by the Financial Conduct Authority under Part VI of the Financial Services Markets Act 2000 (as amended from time to time);
'Retained Group'	the Company and its subsidiaries and subsidiary undertakings, being the continuing businesses of the Group following the Disposal;
'Shareholder(s)'	holder(s) of Ordinary Shares;
'Titles'	the titles held by the Business, being the Bury Free Press, the Local (Bourne), Diss Express, Fenland Citizen, Lincolnshire Free Press, Grantham Journal, Haverhill Echo, Lynn News (Tuesday and Friday), Newmarket Journal, Rutland Times, Suffolk Free Press, Spalding Guardian and Stamford Mercury; and
'TSA'	the transitional services agreement entered into between Johnston Publishing Limited and Iliffe Media Publishing Limited relating to the provision of transitional and content services by Johnston Publishing Limited to Iliffe Media Publishing Limited.

IMPORTANT NOTICE

This announcement does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe, for, underwrite or otherwise acquire, any securities of the Company or any member of its group in any jurisdiction or an inducement to enter into investment activity.

This announcement is not directed at, or intended for distribution to or use by: (i) any person or entity outside the United Kingdom; or (ii) any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing.

This announcement contains or incorporates by reference 'forward-looking statements'. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'anticipates', 'projects', 'expects', 'intends', 'aims', 'plans', 'predicts', 'may', 'will', 'seeks', 'could', 'would', 'shall' or 'should' or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and include statements regarding the intentions, beliefs or current expectations of the Board concerning, among other things, the Company's results of operations, financial condition, prospects, growth, strategies and the industries in which the Company operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future or are beyond the Company's control. Forward-looking statements are not guarantees of future performance and are based on one or more assumptions. The Company's actual results of operations and financial condition and the development of the industries in which the Company operates may differ materially from those suggested by the forward-looking statements contained in this announcement. In addition, even if the Company's actual results of operations, financial condition and the development of the industries in which Company operates are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods.

The forward-looking statements contained in this announcement speak only as of the date of this announcement. The Company and the Board expressly disclaim any obligations or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law, the Prospectus Rules, the Listing Rules, the London Stock Exchange Rules, the EU Market Abuse Regulation and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.