Lee Enterprises to file for bankruptcy after debt renegotiation fails
St. Louis Post-Dispatch | Lee Enterprises
Lee had reached agreements with creditors to refinance most of its debt, but not enough to avoid bankruptcy. The company will file for a prepackaged Chapter 11 bankruptcy sometime around Dec. 12. The Post-Dispatch reports that "the bankruptcy will have no impact on its business. Vendors, advertisers, subscribers, employees and the company's operations will not be affected." The company runs about 50 newspapers in 20-some states. Lee's stock closed at 53 cents per share, down one cent, before the announcement; the price was rising in after-hours trading. || Earlier: Lee CEO says refinancing removes cloud over company (Poynter.org)
The staff memo from Lee CEO Mary Junck:
December 2, 2011
Dear Lee Stockholders and Employees:
There is welcome news for all of us who have a stake in Lee. The terms are in place for the completion of a comprehensive refinancing of Lee’s debt.
We have achieved agreements with an overwhelming majority of our creditors to extend our existing loan agreements on reasonable terms that preserve stockholders’ ownership interests in the company with only 13% dilution.
As we previously noted as a possibility, implementation will require a favorable, voluntary, prepackaged Chapter 11 process to bind the remaining minority of non-consenting lenders to the terms of the agreements. While such a filing falls under bankruptcy laws, in our case it differs significantly from most such filings because it preserves interests of stockholders and all other parties. The process will simply provide a favorable legal framework for implementing the agreements.
The court process is expected to take 60 days or less. In the meantime and throughout the process, we expect there will be no change in our business. There will be no impact on employees, customers, vendors, contractors, contracts, company operations or corporate governance. We expect Lee stock will continue to be traded on the New York Stock Exchange.
I am enclosing our news release with additional details.
Although the refinancing will require Lee to pay higher interest rates, it and our strong cash flow will keep Lee on solid financial footing as we continue reshaping our company for long-term growth by expanding our digital platforms, building audiences, driving sales and improving our balance sheet.
As I hope you noticed in our most recent earnings release, Lee has continued to outperform the industry in multiple measures, most notably in digital advertising growth and audience growth. As I also hope you noted in our recent President’s Awards announcements, our publishers, editors, management teams and employees throughout our company have demonstrated outstanding journalism, innovation and spirit. All of this underscores our excitement and confidence as we enter 2012.
With deep appreciation for your continuing support,
Chairman, President and Chief Executive Officer