Their idea was simple: create a trust which would represent the interests of staff – all staff, not only journalists – and which could approach funders for credit to finance a 25% stake in Independent’s South African operation when the Irish owners did decide to sell, as it seemed they would have to do. The loan would be paid back over time through dividends. No staff member would have to put in any money, and no staff member would get any money out. Once the loan had been repaid, further dividends could be used for staff training, scholarships or similar initiatives. A 25% stake in the company would guarantee the trust a seat on the board and give staff a voice in the company’s future. This would set a precedent in South African media. Although under the Irish owners Independent managers and editors had been issued shares in the listed company as part of their pay packets, the general staff had never had any meaningful stake.
Crotty floated the idea to colleagues, who responded with interest. A blog was started to keep in touch with staff and Archbishop Desmond Tutu agreed to be the patron of the trust, sending a message for the blog on 31 August 2009: ‘I am honoured to be your patron. We know that the price of freedom is eternal vigilance and at this particular stage in our nascent democracy more than ever we need a free and independent press. The powerful are kept on their toes most often by the knowledge that any excesses and abuse of that power will be fearlessly exposed. You are absolutely crucial. All power to you all. God bless you.’
Gumani formally informed local CEO Tony Howard about the establishment of the trust at the beginning of June 2009, and sent out a statement the following month, announcing that Mwasa was involved in setting up a staff trust in the South African company. But the statement was met with a hostile reception from Independent’s South African management. Editorial director Moegsien Williams emphasised to Dasnois that the company was not for sale. She explained that the plan was to have a trust in place in case the controlling shareholders decided to sell, so that journalists would have a voice in any future discussions about the ownership of the company.
Crotty wrote to O’Brien on 12 August 2009, suggesting the sale of a stake in INMSA to the trust. ‘While the sale of a stake to a journalists’ trust would reduce INM plc’s cash flow from the SA business, we believe it would be justified in terms of the long-term value that the project would create. It would also deal very effectively with any concerns about under-investment in an industry that plays a critical role in this country. In addition, given that the terms of the trust would include a commitment to editorial independence it would also deal with any concerns South Africans might have stemming from possible changes within the control structure at INM plc.’
O’Brien responded a fortnight later, telling her that he was in the process of ‘trying to help restructure the balance sheet’ of INM plc and could not comment.
Meanwhile, the Irish Times reported on 25 September 2009 that O’Brien, described as a ‘rebel investor’, had offered the banks €100 million upfront in return for a majority stake. INM had fought off the offer, the Irish Times reported, and had said the company was close to an agreement with the banks. INM plc had also fought off an attempt by O’Brien to stop annual payments of €300,000 to former chief executive Tony O’Reilly, now ‘president emeritus’.
The board went ahead with its own debt-for-shares swap in November. By the end of the operation, the creditors held 47% of the shares in INM plc, and the stake of the O’Reilly family had been slashed to 14% and that of O’Brien to 13%. Creditors also agreed to an extension of repayment terms for other debt. For now, disaster had been averted. But the company was still not out of the woods, and another rights issue was planned for later in the year, to raise the remaining €94 million of immediate debt.
In the meantime, Crotty and Dasnois continued their discussions with staff and potential funders, working on an estimate of R500 million for a 25% stake in INMSA. One of the possible funders was the Public Investment Corporation (PIC), which invests on behalf of the giant Government Employees Pension Fund. Crotty had met PIC head Brian Molefe in October 2009 and the trust had sent a serious proposal to the PIC. Trustees told colleagues in November: ‘We believe that the profile of the … trust that we have in mind would represent an ideal empowerment shareholder for INMSA.’
Matters were to be left there for the next three years, until INM plc once again found itself up against a mountain of debt – and this time it seemed there would be no way out. O’Brien won his battle against the O’Reilly family, kicking out Gavin O’Reilly in April 2012, three years after his father, Sir Anthony, had been ousted. Gavin O’Reilly collected a €1.87 million exit package, and Vincent Crowley was appointed chief executive. He launched a whole new programme of cost cutting. He also closed the INM head office in Dublin and the company’s London office, and implemented a redundancy scheme at the Sunday World newspaper in Ireland. In Cape Town, Newspaper House had already been sold (in 2011), and the R90 million proceeds shipped home to Ireland.
But in spite of all this destruction, the debt reduction was very slow and by June 2012 it seemed that the parent company would have to sell off bigger assets to pay off part of the debt. O’Brien now had just under 30% of INM plc. By June 2012, Irish newspapers were reporting that he wanted to sell the South African operation and spend the money on the company’s Australian ventures. For the first time, the sale of INMSA was officially on the table. And bidders were not slow to respond.
The Irish Times reported on 15 June 2012 that ‘Sekunjalo Investment Holdings, which has as its CEO former African National Congress (ANC) activist Iqbal Survé, is said to be putting a bid together; while so too is ANC-linked businessman Cyril Ramaphosa of Shanduka Investment Holdings’. On 10 July, the Financial Times reported that INM, described as ‘the indebted Irish media group’, had appointed advisers to work towards a sale of its South African publishing business. Sekunjalo and Shanduka were again mentioned as possible bidders.
It was time to revive the idea of the staff trust. Crotty, Dasnois and Gumani had brought Gordon Young, investment adviser to black empowerment group Ditikeni, on board. Young agreed to advise the trust in exchange for a small stake in INMSA for Ditikeni.
Crotty and Dasnois approached staff again, pointing out that ‘there has recently been a change of control of the Independent News and Media Group in Dublin. The new controlling shareholders appear to be keen to sell INMSA. They have already appointed advisers to assist them. This provides us with an opportunity to seek a shareholding in INMSA.’
Once again, reaction from INMSA management was hostile. On 29 May 2012, group editorial director Moegsien Williams flew to Cape Town to warn Dasnois to stop ‘sowing discontent and uncertainty’ among staff through the idea of the staff trust. Williams told Dasnois that she must not use company resources or company time to send information to staff about the trust, and she must not ‘embarrass’ the CEO or ‘put him in a difficult position’. If she continued to do so, the company would have to ‘look at taking action’. ‘We are very serious about dealing with this matter,’ he told her. In a follow-up letter sent to her on 1 June, Williams emphasised: ‘The company has not been put up for sale, and while you are in our employ, we expect you to further the company’s best interests.’ She was then handed a written warning not to disregard his instructions on the matter.
Though the ban on communicating through workplace channels made it harder for the trustees to stay in touch with staff, discussions with staff members continued, and Crotty, Dasnois and Gumani organised meetings in Johannesburg, Cape Town and Durban. Staff members who had stood by powerless during the destruction of the O’Reilly years welcomed the chance of a stake in the future and signed letters of support.
As the trust had no funds, Crotty and Dasnois paid for air tickets, blog development and the registration fees of the trust out of their own pockets. Work on the trust deed was done pro bono by the firm of lawyers ENS. The trust was registered in December 2012 as the Independent Trust for Media Freedom, with Gumani, Crotty and Dasnois as its founding trustees. The trust deed stipulated that new trustees would be elected by members within 120 days of the trust’s registration.
The trustees and Young also engaged in talks with several people who were officially or unofficially interested in a bid. One of