The already troubled newspaper industry got another piece of bad news
recently, when Affiliated Media Inc.
announced it is filing bankruptcy.
Affiliated is the holding company for MediaNews Group, one of the largest newspaper publishing companies in the country, owning and operating more than 50 daily newspapers in California, the
Northeast and the Rocky Mountain region. The company's papers include the Denver Post and the San Jose Mercury News.
According to a report by the Wall Street Journal, Affiliated Media Inc. announced that it had reached an agreement with its vendors to restructure under the protection of bankruptcy.
Via the terms of the agreement, a group of creditors led by Bank of America will receive a majority of new stock. Affiliated Media Inc. will also have its existing equity canceled.
The streamlined bankruptcy, often called a prepackaged bankruptcy, involves a series of agreements that are in place with creditors before the case goes before a judge. Therefore, when the case does go in front of a judge, there is minimal resistance from creditors and the case moves through quickly.
A press release from Affiliated Media Inc. outlined their goals in filing for the streamlined bankruptcy. The financial restructuring of the company will, according to the release, reduce the company’s debts, “boost its cash flow and allow greater financial flexibility.”
While the bankruptcy is being filed through Chapter 11, it is a prepackaged plan that only affects the holding company itself. Furthermore, MediaNews Group and its newspapers, publications and broadcast outlets are not a part of the filing. MediaNews Group operations will continue on a normal basis.
The message to vendors working with MediaNews Group was that the company has ample cash to maintain these operations and to fund all of their obligations. Invoices, credit terms and financial agreements would carry on as they did before the holding company’s bankruptcy announcement.
According to the Wall Street Journal report, MediaNews Group has been “teetering for months.” Existing chairman and chief executive William Dean Singleton, as well as current company president Joseph Lodovic IV, will control the company after the restructuring.
Singleton did claim that the strong effort reduce debt led him to develop the concept of newspaper consolidation, which many have claimed would help the troubled industry to weather difficult times. When Singleton was asked which newspapers might be considered for consolidation, he replied, “You can look at the map.”
The prepackaged bankruptcy will allow senior lenders to swap debt for equity, which will allow the company to reduce debt load from almost $1 billion to about $165 million.
MediaNews Group also said that all but one of their newspapers are profitable.
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