The administrators of City A.M. have published more information about the sale of the London newspaper to THG.
The North West ecommerce group paid a total of £1.5m for City A.M. in the pre-pack sale – and also paid staff wages for July.
The £1.5m which was paid on completion of the deal was split:
- £1.49m was goodwill and intellectual property;
- £14,600 plant and machinery; and
- £1 each for business records and stock.
The joint administrators from BDO revealed that the paper never recovered from Covid-19. The lack of commuters “and therefore readers” of the printed paper meant that advertising fell, plus printing and distribution of the printed edition “became unviable.”
In 2020, it went online only and turnover fell 61% to £3m, with a loss before tax of £540k.
The following year it returned to print, but the cost of printing and distribution had “increased significantly” – management estimated a rise of about 40%.
Turnover rose marginally to £3.7m in 2021 with a small profit of £59k.
A year later revenues increased to £6.1m, but increased costs meant a loss before tax of £584k and net liabilities rising to £2.6m.
In 2023, the directors said they had agreed, in principle, for a prospective shareholder/investor to inject additional funding by acquiring 25% of the company’s share capital – this ultimately didn’t happen.
As discussions became “protracted” Metro and City AM formally engaged BDO to “undertake a high level short term cashflow and options review.”
It also brought in FRP to assist with an “accelerated sale process” with a deadline to buy the company set for 14th July – this date was set by cash flow forecasts and its inability to continue to trade.
While no offer to purchase the share capital was received by the deadline, THG did submit one to acquired its business and assets – excluding liabilities.
It stated that this was considered “likely to result in a better outcome for creditors than any alternative options.”
On 24th July THG agreed to pay £92,542 to cover salaries – excluding those of the directors.
On 26th July, CAM Realisations 2023 Ltd (formerly City A.M. Ltd) entered into administration, with the sale of its business and assets to THGN1 – a wholly-owned subsidiary of THG completed on the same day.
All 38 employees were transferred under TUPE to THGN1.
BDO said that at the time of administration, CAM Realisations 2023 Ltd’s unsecured creditors’ claims totalled £2.047m and the joint administers have received claims of £2.364m, with additional claims expected to be received “in due course.”
HMRC was owed around £677k related to VAT, PAYE and National Insurance
The company’s debt to Metro was £753k and it’s anticipated that Metro will be repaid “between 44p and 75p” in the pound.
Among the other major debts were £328k owed to SMEIF.
At the time of the purchase, THG told City AM staff that they would invest in both editorial and tech as well as expanding its lifestyle and sports categories.
CEO, Matthew Moulding stated that the paper would be “supported by unswerving investment from THG, there will be just one rule for the future editorial direction of CityAM:
“‘Where possible, be a cheerleader for both the UK and businesses alike, and don’t get dragged over to the dark side.’”
