Dec 12 (Reuters) - Lee Enterprises Inc, which publishes 48
daily newspapers including the St. Louis Post-Dispatch, filed
for Chapter 11 bankruptcy protection on Monday to refinance
nearly $1 billion in debt.
Lee is the third-largest newspaper publisher to file
for bankruptcy, behind MediaNews Group Inc and Tribune Co, as
readership and advertising revenue continue to dwindle across
the industry.
Lee was founded in 1890 in Ottumwa, Iowa, by A.W. Lee.
Most of the company's newspapers trace their beginnings to the
mid-1800s. Among Lee's alumni are Mark Twain, Willa Cather and
Thornton Wilder.
The company plans to repay its creditors in full and
will use the bankruptcy to essentially extend the maturity of
about $1 billion in debt that was coming due in April.
Under its plan, the company will push out that
repayment to 2015 and 2017, although with higher interest rates,
according to court documents.
The company's creditors already have voted to back the
plan. Lee expects to emerge from bankruptcy in the coming
months.
Lee filed for Chapter 11 in U.S. Bankruptcy Court inDelaware.
The company's shareholders will not be wiped out, as is
typical in bankruptcy. However, Lee will issue new shares to
creditors that will dilute current shareholders by around 13
percent.
Lee's shares were down about 5 percent at 73 cents on
the New York Stock Exchange in morning trading. The shares were
trading at around $2.50 a year ago.
Lee employs 6,200 and is the eighth-largest newspaper
publisher in the United States, according to Dirks, Van Essen &
Murray, a firm that assists in the sales of daily newspapers.
The company's papers have a daily readership of 1.3 million,
according to court documents.
In 2005, Lee acquired the Pulitzer Inc newspaper
publisher. While the deal added the St. Louis Post-Dispatch, the
main daily in the city, it was funded primarily through
debt.
Like many of its competitors, Lee has bled cash amid
the growth of online classified ads. In the year to Sept. 25,
Lee suffered an operating loss of $103.3 million on revenue of
$756.1 million, according to court documents.
The bankruptcy comes two months after the company had
reached an agreement with most its lenders to refinance $769.5
million of its distressed loans.
However, Lee was forced to file for bankruptcy because
6 percent of its lenders did not consent to the out-of-court
plan, which required unanimous approval.
In court documents, Lee Enterprises listed liabilities
of $994.5 million and assets of $1.15 billion.
The case is: Lee Enterprises, Case No. 11-13918, U.S.
Bankruptcy Court, District of Delaware.
For Lee Enterprises: Edmon Morton of Young, Conaway,
Stargatt & Taylor.
(Reporting by Sakthi Prasad and Tom Hals)
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