As expected, The Minneapolis Star-Tribune has filed for Chapter 11 bankruptcy protection, as the newspaper failed to get a key union agreement on cost-containment, the paper reported. The paper made the filing in U.S. Bankruptcy Court in the southern district of New York. The decision to claim bankruptcy followed several missed debt payments over the past year. The paper was bought only two years ago from The McClatchy Company (NYSE: MNI) by Avista Capital Partners for $530 million. The news follows increased fears of other newspaper company bankruptcies after The Tribune Company, which is unrelated to the Star-Trib, filed for Chapter 11 last month.
Publisher Chris Harte sought to assure readers that the filing would not impact delivery, advertising or the other of the newspaper’s operations. What’s likely to be affected the most is the company’s labor contracts. Last week, the paper failed to strike a key agreement on cost-cutting with one of its unions. The Newspaper Guild walked away from talks with the publisher, saying that it has been unable to strike an accord on how the $4 million in budget cuts would be dispersed. In addition to restructuring its lending agreements, the paper plans to seek changes governing labor contracts.
In its filing, the newspaper said it had assets of $493.2 million and liabilities of $661.1 million. Last year’s EBITDA was about $26 million in 2008, compared to $59 million the year before.
Photo Credit: Stephen Cummings