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."
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.
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