LONDON: The world's largest publisher of free newspapers, Swedish-owned but London-headquartered Metro International, last week revealed it had breached its debt covenants and has insufficient working capital to survive for the next twelve months.

Dramatic though it is, the revelation is unlikely to have caused much surprise. Not only did the company last week announce its exit from the Spanish market, but its long-term failure to move out of the red has given cause for concern.

According to a company statement: "Due to a higher than expected downturn in the global economy and its impact on the advertising market the group was unable to meet its ambitious break-even operating result for 2008.

"This means the company breached one of the key covenants in its revolving bank facility and triggered the need to raise funds to repay the outstanding bank loans of €28.7m ($37.0m; £25.1m)."

Metro hopes to pay back the outstanding debt by April 2009.

Nonetheless, the moneymen appear to have faith in the venture despite the current economic ice age. The rights issue has been underwritten by Stockholm-listed Kinnevik Investment which owns 44% of Metro and will subscribe for its portion of the offer.

Data sourced from Financial Times; additional content by WARC staff