Printer Friendly

LEE TO EXIT CH. 11 NEXT WEEK; SHARES SOAR 23% TO $1.10 Newspaper publisher reports quarterly ad revenue down 6%.

With extraordinary speed, the federal bankruptcy judge in Lee Enterprises Inc.'s Chapter 11 reorganization today approved the company's plan and Lee said it expects to exit by next Monday, a mere seven weeks after filing. Wall Street voted its approval by bidding the price of company's shares up by 23.6 percent in one-day trading, closing at $1.10.

The Davenport, Iowa-based newspaper publisher also last week announced its quarterly results: in what for it was the first quarter, Lee said net income declined 23.2 percent, to $14.6 million, while earnings per diluted share were down 23.8 percent, to 32 cents, when compared to the 13 weeks ending Dec. 26, 2010.

And while those numbers weren't the best, Lee did report that total ad revenue for the period was down only 6.1 percent, to $142-1/2 million.

At today's bankruptcy hearing in Delaware, Judge Kevin Gross approved a plan that converts about $855.8 million of debt -- mostly accrued in the 2005 purchase of Pulitzer Inc. -- into a new $689-1/2 million first-lien secured term loan, as well as $175 million in second-lien loans and about 15 percent of the company's equity.

The deal preserves shareholder value in the newspaper publisher, a unique situation in most bankruptcies, an unsecured creditors won't be hurt either.

Lee was forced to go to a "pre-packaged" Chapter 11 filing because it was unable to get 100 percent of its lenders to agree to restructuring the debt. Conversely, the company received no negative votes on the bankruptcy plan from creditors.

In its Dec. 12 filing for Chapter 11, Lee listed $1,200 million in assets and $1,300 in debt. By comparison, Tribune Co. filed for bankruptcy Dec. 8, 2008, and by all appearances will remain in Chapter 11 through this summer, putting it into 3-1/2 years. Partially the difference stems from the magnitude of the money -- Tribune listed $13,000 million in debt and $7,600 million in assets -- but partially it is because many Tribune bonds were acquired by a hedge fund that wants to wring the last penny out of any bankruptcy settlement.

Lee's first-quarter results were unremarkable: the decline in ad revenue was not offset by the small gains in circulation revenue (up 2.7 percent, to $46.7 million) or commercial printing revenue (up 2.9 percent, to $3.1 million), nor particularly hurt by a two-percent decline in digital services and other revenue, to $7.2 million.

While most expense categories were down, they weren't down as much as the ad revenue was down. Newsprint and ink declined 5.2 percent, to $14.9 million, with newsprint consumption down 5.9 percent, to 21,458 metric tons.

National ad revenue -- the smallest category at most papers -- was actually up 1.4 percent, to $10.4 million, while retail declined 5.4 percent, to $91.7 million, niche publication revenue was off 6.7 percent, to $2.7 million, and classified dropped 9.7 percent, to $37.6 million.

Classified employment revenue was essentially flat when compared to the 2010 quarter, at $8.6 million, while automotive declined 4.1 percent, to $10.3 million, "all other" was down 15.2 percent, to $13.2 million, and real estate dropped 17.9 percent, to $5-1/2 million.

Lee's share price began to move on Wednesday, the day after quarterly results were released. By Thursday, shares closed at 82 cents, up a dime from the week earlier and on Friday, volume in Lee shares was up as was the price, to 89 cents. Today's trading volume was more than 1 million -- about four times regular volume for the company -- and shares surged to $1.10.

Lee's shares have traded as low as 49 cents per share over the last year and as high as $3.47.

In other newspaper business revenue news, The E.W. Scripps Co. on Tuesday predicted that it expects full-year 2012 newspaper revenue to be "down slightly" to about $400 million (it also thinks its TV revenue is going to go through the roof, but that is in part because it bought all those new stations late last year). We may not be out of the woods yet, but I think I can see the edge of the forest up there ahead.
COPYRIGHT 2012 The Cole Group
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2012 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Date:Jan 23, 2012
Previous Article:PERSONS.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters