A total of 48 newspapers, under the helm of Lee Enterprises Inc., are currently listed in bankruptcy and have gained permission from bankruptcy court for million-dollar funding, as reported by Bloomberg and several other media sites.
Lee Enterprises Inc., based in Davenport, Iowa, owns the St. Louis Post Dispatch along with 47 other daily newspapers across the U.S.
U.S. Bankruptcy Judge Kevin Gross, District of Delaware (Wilmington), has given an interim approval of a $20 million loan to Lee. The company will be back in court to ask for an additional $20 million on January 6, and again on January 23 to see approval for their pre-packaged plan.
Lee gained control of Pulitzer Inc. in 2005 so that they could acquire the Post-Dispatch. The company also has interests in four more daily newspapers and owns 300 specialty publications.
The bankruptcy protection was sought on December 12. To blame, per the company, is the lessening demand for newspaper advertising. The loss of advertising revenue caused three years of decline. Within that three-year period, per court papers, an out of court restructuring had failed.
According to court documents, Lee Enterprises listed $1.2 billion in assets and $1.3 billion in debt.
Bojan Guzina, the attorney representing Lee in the bankruptcy said that Lee has had "overwhelming support" from its creditors. Guzina claimed that there was not a single vote rejecting the company's proposal to restructure the billion dollar debt due to mature in April 2012.
Guzina added, "It's remarkable. I know how hard everyone had to work to get that result."
Of the approximate $855.8 million owed to its lenders, the reorganization plan allows all - or a portion - to be converted for a share of a new $175 million second-lien facility. The reorganization also gives lenders 15 percent of the company's reorganized equity.
A new loan, maturing in 2015, will allow the remaining lenders' debts to be converted into a secured term loan of $689.5 million.
Goldman Sachs Lending Partners LLC, Mutual Quest Fund, Monarch Master Funding Ltd., Mudrick Distressed Opportunity Fund Global LP and Blackwell Partners LLC are among the lenders that have already agreed to acquire much of the second-lien loan of $166.3 million.
Of approximately $127.6 million in Pulitzer note holders, they are expected to get new notes maturing further out - in 2015 - in the restructuring. When issued, per the company, their worth should total just about $126.4 million.
A revolving exit facility, under the plan, would be made for the $40 million in bankruptcy financing.
Equity holders are not expected to be cleaned out in the bankruptcy. Court papers show that they will be able to retain their interests in the company. Also not expected to be affected in the filing are unsecured creditors.
According to court records, Lee Enterprises Inc., founded over 100 years ago, has a daily circulation in the 1.3 million range. For the year ending September 25 the company's revenues totaled $756.1 million and losses were incurred at $103.3 million.
Contact a bankruptcy attorney if you are in need of filing for a business or personal bankruptcy. The proper legal representation can help!