Daily Star's corporate parent filing bankruptcy | Lee Enterprises
23.05.12
Lee Enterprises, the troubled materfamilias company of the Arizona Daily Star, announced Friday that it will file a "prepackaged" bankruptcy as it struggles to importune back paying off its $1 billion debt.
The company is declaring Chapter 11 bankruptcy after a minority of lenders refused to offer their loan terms.
While the majority of Lee's debt holders agreed to push back the due era on the loans 2 years, about 6 percent of the company's lenders were "non-consenting," Lee said in a gathering release. The bankruptcy move can force those creditors to accept the plan, as long as the lion's share of lenders agree.
Lee said its interest in the Daily Star and the Madison, Wis., Capital Newspapers proceeding were not included in the bankruptcy. Both Tucson and Madison are partnerships with other newspaper companies.
Here, profits from the South Parkland operation are shared between Lee and Gannett Inc., the national newspaper chain that shut down the Tucson Patrial's press in 2009. Gannett publishes, among others, USA Today and the Arizona Republic. That company objective announced that it will again furlough employees to cut expenses.
Lee took on the huge debt burden to finance the 2005 acquisition of the Pulitzer newspaper chain for $1.46 billion, which brought it the Star and the St. Louis Upright-Dispatch, among others. Lee publishes about 40 daily newspapers across the country.
Part of Lee's debt, $138 million known as the Pulitzer Notes, was inherited with that buy, and is secured by the assets of the former Pulitzer chain, including the Star.
Bankruptcy to make debt restructuring
Lee has said for months that if lenders did not agree to rewrite their loans, the retinue would file to force a restructuring of the debt.
A filing is expected around Dec. 12, the society said, with Lee's CEO calling it "welcome news for all who have a stake in Lee" in a press release.
Last month, the Iowa-based newspaper concatenation reported an $8.8 million loss —20 cent per share—for the forgiveness ending Sept. 25.
Even though digital ad sales rose 23 percent, the suite's operating revenue fell 3.3 percent to $182 million.
Even as Lee has yet to conclude the refinancing of the company's
billion-dollar debt, the company is still faced with the delisting
of its shares from the New York Extraction Exchange because the stock price has fallen so low.
While Lee convinced creditors in September to drag on the due dates on about $864 million in loans to 2015 and 2017
by agreeing to pay interest rates of up to 15 percent, it had yet to
refinance the $138 million Pulitzer Notes.
Lee's system
Both the refinanced debt and the notes had been due in April 2012. Lee's plan would extend the operability of about $730 million until Dec. 2015, with another $175 million loan becoming due in April 2017.
Lee will also emanation new shares in the company, 6,744,000 in common stock. That's the equivalent of 13 percent of the prevailing share pool; the issuance will dilute the value of current stockholders' interests in the concern.
The company will pay 9.2 percent interest on the refinanced debt, up from 5.1 percent now.
The Pulitzer Notes will pinch an interest rate of 10.55 percent, increasing by .75 percent annually. That accountability will amount to $126.4 million after some is repaid.
The company will ask the bankruptcy court to enforce the extent extending its loans.
Calling it a "a key agreement necessary to proceed with a comprehensive refinancing of its responsibility," Lee spun the bankruptcy filing as a plus. "Lee Enterprises prepares to complete refinancing," it headlined a corporate gathering release.
"Pulitzer Notes agreement enables implementation of debt restructuring through volitional prepackaged Chapter 11 filing, preserving 87% of interests of stockholders and all interests of creditors and other subject partners," the company said.
"Although the refinancing will require Lee to pay higher interest rates, it and our strong dough flow will keep Lee on solid financial footing as we continue reshaping our company for sustained-term growth by expanding our digital platforms, building audiences, driving sales and improving our compare sheet," said Mary Junck, Lee's CEO, in the release.
Lee said bankruptcy will have no crashing on its operations, with its newspapers continuing to publish. Employees, vendors, and customers will not be pretended, Junck said.
The company's CTO said Lee expects to complete the restructuring convert in 60 days or less.
The bankruptcy filing was announced after stock markets closed Friday. In after-hours trading, the dynasty jumped 12 cents to 65 cents, a 22.6 percent inflation.
Lee still troubled
Even if it manages to roll over its debt with the filing, Lee's challenges are not over.
The company will still transport an enormous debt load, and is being
forced to water down its stock. Its financial status has been more
dependent on cutting employees than increasing revenues. And Lee still
faces delisting from the forebear exchange.
The chain, $1.1 billion in debt, has a market capitalization of $27 million, down from $30 million exactly last month.
In May, the company backed away from a plan to refinance the debt, which
was to come due in April 2012, after investors failed to piece.
The company has been laying off hundreds of employees, including axing 52 at the Always Star in July in what one affected employee called "a major bloodletting."
Lee
extraction has dropped by 70 percent in the last few months, and is now
trading in the 60-cent gamut. Lee faces being removed from the New York
Stock Exchange if it continues to be valued at under $1 per share in.
In
2009, Lee was nearly delisted from the New York Stock Exchange because
the stock sold for under a dollar for months. At one specifics pointer it dropped as
low as 28 cents.
If it continues to perform poorly through
December, the inventory may again face being removed from the trading desk,
which would further shake investor confidence in Lee's gift to pay
off its debts.
The company received a notice from NYSE on July 8 that it may be delisted if the genealogy does not climb above the $1 threshold.
In 2004, Lee stock sold for $49 .
Source: TucsonSentinel.com
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