The regional newspaper publisher will raise £140m through a placing and rights issue, jointly underwritten by Panmure Gordon and JP Morgan Cazenove, and £220m through the issue of new senior secured fixed-rate bonds.

Johnston Press will also enter into a new £25m revolving credit facility, expected to mature in 2018.

The proceeds of the capital raise will be used to accelerate the deleveraging of the group's balance sheet, extend the maturity of its financing arrangements from September 2015 to 2018 and beyond, and to invest in growing the group's digital presence.

Ashley Highfield, chief executive of Johnston Press, said: "Johnston Press has already achieved much in turning around our business performance, with 2013 marking a return to underlying operating profit growth for the first time in seven years. The refinancing of the business is another key milestone...and will allow the Group to continue to focus its efforts on the ongoing implementation of the Future Strategy.

"The Board considers that the successful implementation of the Future Strategy, in combination with the implementation of the Capital Refinancing Plan, will provide a platform from which the Group can return to overall revenue growth and generate increased surplus cash flow with a view to further deleveraging the Group and re-investing some of that surplus cash to grow its digital presence further.

Meanwhile, Johnston Press has formed a strategic partnership with Sky, which has separately agreed to invest £5m in the regional newspaper publisher via the placing and rights issue.

The partnership combines Sky's new localised TV advertising product, Sky AdSmart local, with Johnston Press's range of regional print titles and digital platforms to enable SMEs to incorporate TV ads focused on specific local markets into their print and digital campaigns.

Johnston Press and Sky AdSmart will launch their joint offering in two regional markets: Nottingham, Derby and Sheffield; and Milton Keynes, Northampton and Peterborough.

Sky AdSmart, which has already been used by 100 advertisers since its launch including national brands and local advertisers, is said to allow SMEs to compete on a level playing field with larger national brands, by removing the requirement for large budgets to cover whole regions.

Johnston Press publishes 13 paid-for daily newspapers, 196 paid-for weekly newspapers, 39 free titles, 10 lifestyle magazines and 198 local news and e-commerce websites.

The company has suffered from declining print circulation and advertising revenue in recent years, which has only partially been offset by growth in its digital revenues. However, Johnston Press claimed that it was approaching a tipping point in digital growth.

"The directors believe that the point where digital growth will offset any further decline in print advertising has almost been reached so that the group can return to overall top-line growth," the company said.

According to unaudited management accounts for the first three months of 2014, local display print advertising revenues outperformed national display, while circulation revenues declined broadly in line with 2013.

Adjusted group revenue for the first three months of 2014 was said to have recorded a mid-single-digit rate of decline over the previous year (compared with an 11% year-on-year fall in Q1 2013).

On 1 April 2014 Johnston Press entered into an agreement to sell Formpress, which held the trade and assets of its ROI operations, to Iconic Newspapers for £7.2m in cash; the operating profit before exceptional items for the assets subject to disposal was £1.1m in the 2013 financial year.