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GateHouse Media Inc. has begun voluntary Chapter 11 bankruptcy proceedings and has filed a prepackaged plan for reorganization, the Perinton-based newspaper chain announced Friday.
The filings were made in the U.S. Bankruptcy Court for the District of Delaware.
“We have complied with, and are current with, all our obligations, but with the challenges facing our industry and the impending maturity of our secured debt next year, we needed to be proactive in exploring options to restructure our debt, recapitalize and position ourselves for future growth,” GateHouse Director and CEO Michael Reed said in a statement.
The prepackaged plan calls for “balance-sheet restructuring” that will enable the company to emerge from bankruptcy with much less debt but with business operations completely intact, Reed said.
GateHouse (OTC: GHSE) revealed in a Sept. 11 filing with the U.S. Securities and Exchange Commission that it would seek bankruptcy protection.
That filing came after Newcastle Investment Corp., which holds $626 million of GateHouse’s $1.2 billion in debt, laid out details of the pact in an investor presentation describing its $87 million acquisition of Dow Jones Local Media Group from News Corp.
GateHouse will emerge from bankruptcy under common ownership with Local Media Group, the company said Friday. Local Media Group produces 33 publications in seven states and generated $162 million in revenues last year.
Pension, trade and all other unsecured creditors of Gatehouse would not be impaired under terms of the prepackaged plan, the company announced.
GateHouse’s common stock would be canceled, with holders of secured debt having the option of receiving a cash distribution equal to 40 percent of their claims or receiving stock in New Media Investment Group Inc., a new holding company that will own GateHouse and Local Media Group.
GateHouse operates in 330 markets in 21 states. It plans to operate without interruption as a debtor-in-possession under the jurisdiction of the bankruptcy court, the company statement said.
GateHouse has sufficient cash top operate during its bankruptcy and does not intend to obtain debtor-in-possession financing, Reed said.
“We don’t believe our customers, vendors or employees will notice any change on our day-to-day operations as a result of the bankruptcy,” Reed said in the statement. “From an operational standpoint, it’s business as usual.”
GateHouse owns the Daily Messenger newspaper in Canandaigua and several weekly publications in Monroe County.
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