Lee Enterprises (NYSE: LEE), the Iowa-based publisher of dozens of newspapers and digital ventures, plans to use bankruptcy proceedings to restructure part of its debt. The company is preparing a pre-packaged Chapter 11 plan that it says will result in minimal pain for creditors and shareholders.
Lee Enterprises announced the plan in a press release Friday evening, explaining that some senior creditors refused to go along with a September restructuring scheme to extend the maturity of $138 million in so-called Pulitzer Notes. The Chapter 11 proceedings will essentially force the hold-outs to agree to a plan that will see the notes mature in 2015.
Bankruptcy, described in one bitter publisher’s book as “A Feast for Lawyers,” can be a traumatic and expensive experience. This has been the case in the messy proceedings surrounding Tribune Co. But the use of a pre-packaged Chapter 11 filing, which have gained in popularity in recent years, can allow a company to be in and out of bankruptcy court in less than 60 days with little disruption to its operations.
Lee Enterprises says it expects the filing will not affect its employees or the trading of its common stock on the NYSE. It says the plan will allow it to implement its plan from earlier this fall which will result in shareholders’ being diluted by only 13 percent. The company says it has strong cash flow which will allow it to address its debt load going forward.
More details of the pre-packaged bankruptcy plan are described in the release (embedded below), but the crux of the scheme is that bankruptcy law will force the hold-out creditors to accept the plan because most other creditors have already done so.
Lee Enterprises is a major player in the mid-west where it publishes the St. Louis Dispatch, its largest holding by circulation. It also runs dailies in Arizona and Montana and is expanding its digital properties which the company claims attracted 21.6 million unique visitors in the month of September.
Lee NR refinancing 120211
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