Lee Enterprises, the newspaper chain that owns 28 newspapers in the Gateway Journalism Review’s coverage area, including the St. Louis Post-Dispatch, was in and out of Chapter 11 bankruptcy within two months in a move to restructure its huge debt.
The action was aimed at forcing six percent of Lee’s creditors to go along with “an overwhelming majority of lenders,” (94 percent) Lee said it had on board to extend loan deadlines to 2015 and 2017.
The refinancing, effective Jan. 30, means Lee escaped an April 2012 deadline but will have to pay higher interest rates on about $1 billion in debt. The combined interest rates jumped from 5.1 percent to to 9.2 percent. Some Lee creditors will wind up owning 13 percent of the company.
The debt is largely due to heavy borrowing Lee needed to acquire Pulitzer Inc. in 2005. Lee owns about four dozen other smaller newspapers and about 300 specialty publications.
Mary Junck, Lee’s chairman and CEO, said the refinancing “will keep Lee on solid footing as we continue reshaping our company and improving our balance sheet….the process did not affect employees, vendors, contractors, customers or any aspect of company operations.”
While Junck put a positive spin on the company’s finances, figures for Lee’s first quarter, ending Dec. 25, 2011, showed a 23 percent drop in profits, to $14.6 million, compared to the same quarter in 2010. Revenue was $199.6 million, down 3.9 percent from the earlier quarter. Advertising declined 6.1 percent, circulation rose 2.7 percent and digital advertising rose 10 percent, to $16.2 million.
A story on a former Lee employee who lost his insurance can be found here http://gatewayjr.org/2012/02/17/a-former-employee-and-the-loss-of-insurance/.