Journal Register Company, hedge fund sign purchase agreement
Journal Register Company
The Journal Register Company signed a "stalking horse" agreement with 21st CMH Acquisition Co., a unit of Alden Global Capital. JRC declared bankruptcy in September.
The purchase may seem a little weird because Alden already owns Journal Register Company. At the time JRC declared bankruptcy, Digital First Media CEO John Paton sent an FAQ to employees (PDF) that said the company could "no longer afford the legacy obligations incurred in the past."
Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable.
Revenues in 2005 were about two times bigger than projected 2012 revenues. Defined Benefit Pension underfunding liabilities have grown 52% since 2009.
Christine Haughney reported in September that Paton said the bankruptcy was "pretty damn embarrassing” but necessary.
Many media bloggers and followers on Twitter raised concern that bankruptcy was just an easy way for Mr. Paton not to pay the pensions of employees at papers like the New Haven Register and the Trentonian. Mr. Paton said that while “it’s up to the new owner to decide with the unions how they’re going to negotiate” pension benefits, the company’s research showed that employees’ pensions should be protected under coverage provided by the Pension Benefit Guaranty Corporation.
The agreement will go to the U.S. Bankruptcy Court for the Southern District of New York for review, then a public auction will precede the official sale of JRC.
Related: Alden Global Capital’s Randy Smith speaks up for newspapers | How Alden Global Capital has become a major player in the media business