The media company that owns famous newspapers such as the Scotsman and Yorkshire Post has been sold for just £10m, in a sign of the collapsing value of regional papers.

JPI Media announced on Thursday it had been sold to a recently formed publishing group called National World, owned by the former Daily Mirror executive David Montgomery.

The deal will affect more than 100 local and regional newspapers, including historic titles such as the Scotland on Sunday, the Belfast Newsletter, Sheffield Star and Sunderland Echo.

JPI, formerly known as Johnston Press, built itself up from a small Scottish local newspaper firm into a regional giant with a series of expensive acquisitions, paying £570m for the Yorkshire Post and its sister titles in 2002, and £160m for the Scotsman group in 2005.

JPI was then hit hard by the rise in online news and the global recession of 2008; it had been up for sale from some years but potential suitors were deterred by plunging profits at local papers and the company’s significant debts and losses.

Reach, owners of the Daily Mirror, Daily Express and the Record, considered buying it for £50m last year but pulled out of the deal and instead opted to launch rival online-only titles, including Edinburgh Live.

The papers will be now be run by Montgomery, National World’s chairman, and Mark Hollinshead, who was chief operating officer for Reach’s predecessor Trinity Mirror until 2014.

National World’s announcement to the London Stock Exchange revealed that the £10.2m will be paid to JPI’s owners, a US private equity firm, in three tranches, funded by loans of nearly £8.5m.

It will pay £5.2m in cash when the sale goes through on 2 January, but has deferred two other payments of £2.5m until March 2022 and March 2023.

In the stock exchange statement, Montgomery said: “JPI’s historic publishing brands represent the best in journalism and have reliably served their communities and supported local businesses, in some cases for centuries, and never more than in the last year.

“National World will uphold this tradition and implement modern technology to grow the business across a wider footprint based on high quality, unique content.”

Montgomery is expected to replicate the model he used for his last venture, called Local World, which combined more than 100 local newspapers from Daily Mail & General Trust’s Northcliffe Media, and Iliffe News & Media, including the Nottingham Post and Cambridge News, in 2012.

While he transformed the profitability of the group, his tenure was marked by deep cost-cutting and the merger of titles shifted towards digital output. He then sold the business to Reach, which owns regional titles including the Manchester Evening News and the Liverpool Echo, in 2015 in a deal worth £220m.

In November 2019, JPI agreed a £50m deal to sell its crown jewel, the profitable i newspaper, to Daily Mail and General Trust (DMGT), owner of the Daily Mail, Mail on Sunday and Metro, after selling DMGT its printing plants in Portsmouth, Dinnington in South Yorkshire, and Carn in Northern Ireland, in October.

John Toner, Scottish organiser for the National Union of Journalists, said: “The hard-working, committed journalists of JPI Media have endured an extremely anxious few years. In addition to several rounds of redundancies there has been the additional worry of knowing that the company was for sale but without anyone rushing to buy.

“We note that David Montgomery has expressed his intention to grow the company. This is a positive statement about a company that has seen more shrinkage than growth, and we hope that the intention is to preserve existing titles and staffing levels. The staff are badly in need of assurance and stability.”