STAR TRIBUNE TO EXIT CHAPTER 11 BY THIS SEPTEMBER Minneapolis paper will have $100M in debt, new owners, publisher.
Creditors who currently hold about $384 million in secured debt and those owning $96 million in unsecured debt will end up the owners of the paper, displacing Avista Capital Partners and the Chris Harte Family Trust, who paid $530 million for the paper in late 2006.
The paper entered Chapter 11 on Jan. 15 and while a nine-month turn-around isn't the speediest -- automobile maker Chrysler was in and out of bankruptcy in just 42 days -- it is much faster than the year most companies take. During that time, Star Tribune management has renegotiated contracts with six of its 10 unions (representing 94 percent of its unionized workers), bringing in $20 million in annual savings and cut deals with a vast array of creditors, who include Wayzata Investment Partners, Credit Suisse, Angelo, Gordon & Co., Davidson Kempner Partners and GE Capital.
Should the judge and all the other parties agree at the July 29 meeting at U.S. Bankruptcy Court in New York City, there will be a Sept. 17 confirmation hearing and the paper would exit Chapter 11 "a few weeks later."
"In light of the considerable progress achieved to date, I am confident the Star Tribune Co. will emerge from bankruptcy in vastly better shape than when it entered, much more ready for the intense competition that lies ahead in a rapidly evolving news and information industry," said Chris Harte, the paper's chairman and publisher.
Harte said he will step down from the company before it emerges from bankruptcy. He's the scion of the founding family of the former mid- and small-market newspaper powerhouse Harte-Hanks Inc., was publisher of the Portland Press Herald and Maine Sunday Telegram from 1992-1994 and earlier had a nine-year career with Knight Ridder, serving as publisher of two of the company's papers.
Avista and Harte had been bidders when The McClatchy Co. -- which had bought out Knight Ridder -- decided to sell the Philadelphia Inquirer and Daily News in Spring 2006. After losing out to a local investor group, when McClatchy elected to sell the Star Tribune later that same year, Harte and Avista won that one. The Philadelphia papers filed for bankruptcy just 38 days after the Minneapolis paper did.
The bankruptcy judge in the Philadelphia papers' case said on Wednesday that the owners need to have a reorganization plan in place by Aug. 31, extending an exclusivity period that was to have expired today.
The papers' secured creditors had argued against the extension, saying that Philadelphia Newspapers had "failed to engage in any meaningful discussions" with them about a reorganization plan.
Richard Thayer, the company's chief financial officer, testified that it was working on a plan that would inject $50 million in new capital into the company, with about half coming from the original investors who had bought the papers from McClatchy.
In other newspaper industry bankruptcy news, AbitibiBowater Inc. of Montreal said on Wednesday that it had entered into a new agreement with lenders Citibank and Barclays Capital, for $US270 million, providing the company with cash to continue while in bankruptcy.
AbitibiBowater is the continent's largest maker of newsprint; it filed for bankruptcy in both Canada and the United States in April.
Just when you thought it couldn't get any worse, TheDeal.com reports today that Gannett Co. Inc. is in over its head with credit-default swaps and that within two years the company will be dismantled. "They painted themselves into a corner," an unnamed "distressed-debt expert" quoted by the web site says of Gannett management. "They have to raise more than $400 million between now and the middle of 2011 in a market where, frankly, many of their bondholders would rather they default." The 3400-word article is dense with biz-speak ("negative-basis trade," "tranche") but it's summation is that Gannett's problems aren't related to the newspaper business, but to mistakes it made in the bond business.
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|Title Annotation:||Cowles Media Co.|
|Date:||Jun 22, 2009|
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