When the Rocky Mountain News was put up for sale in December (a move that prefigured its February closure), employees clinging to hopes of a last minute reversal of fortune repeatedly pointed to the debts burdening MediaNews Group, owner of the Rocky's rival, the Denver Post. Because MediaNews, chaired by Post publisher Dean Singleton, isn't a public company, however, it was mighty difficult to quantify the depth of that debt. But a new article offers some tantalizing clues.
Last week, Debtwire, an industry subscriber service, published an article entitled "MediaNews Submits Restructuring Plan to Lenders On Deadline, Sources Say," which features a fascinating array of facts and figures. The piece says MediaNews submitted a "preliminary restructuring plan" to a group led by Bank of America, whose forbearance agreement runs through September 30. The proposal called for MediaNews to equitize $732 million of its $832 million credit facility "and give lenders the majority of the reorganized equity." Folks holding the firm's $450 million in subordinated bonds "would receive the remainder of the equity."
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Even more interesting is the following paragraph, which mentions an important conference slated for today and uses the "B" word: "MediaNews has scheduled a 1 July lender call to provide an update on the progress of the negotiations, the second source familiar said. The company is expected to implement its restructuring through a pre-arranged or pre-packaged bankruptcy filing, said the first source, a lender and a sellside analyst."
This move doesn't mean MediaNews is definitely filing for bankruptcy -- far from it. But there's no doubt the outfit owes a big chunk of cash, with assorted amounts needing to be repaid over the course of the next five years. Debtwire says its capital structure consists of a $235 million "revolver," or revolving loan, due December 2009; a $100 million term loan due December 2010; another $147 million term loan due that same month; a third term loan, this one totaling $350 million, due August 2013; $300 million worth of 6.875 percent senior sub notes due in 2013; and $150 million of 6.375 percent senior sub notes due in 2014. The source sited: a filing with the Securities and Exchange Commission.
Ugly numbers -- and this economic environment makes erasing them that much more of a challenge.