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Lee files bankruptcy plan with most creditors’ support

By Lisa Brown, St. Louis Post-Dispatch

ST. LOUIS — With nearly all of Lee Enterprises’ creditors backing a refinancing plan, the publisher that owns the St. Louis Post-Dispatch should be able to emerge from a bankruptcy quickly, experts say.

Lee Enterprises, the Davenport, Iowa-based owner of 48 daily newspapers, filed for bankruptcy Monday in an effort to refinance about $1 billion in debt. On Dec. 2, Lee announced it needed to file for a prepackaged bankruptcy in order to push through a plan it negotiated with creditors.
Barry Lucas, a senior vice president with Gabelli & Co., said having most of its lenders agree to the refinancing should help Lee move through the bankruptcy proceeding swiftly.

“Nearly everyone seems to be on board,” said Lucas, who owns Lee stock and has a “buy” recommendation on the publisher.

With the backing of creditors, Lee expects to exit bankruptcy in 60 days or less.

Lee filed its Chapter 11 bankruptcy petition in the Wilmington, Del., bankruptcy court, becoming the latest debt-laden publisher to use bankruptcy to fix its finances. Lee was to present its initial pleadings before a bankruptcy judge Tuesday.

The company reiterated that the bankruptcy will have no impact on its business operations and papers will continue to publish. The filing “is not intended to impact employees, suppliers or customers,” Lee said in a filing with the Securities and Exchange Commission Monday.

Lee had $1.15 billion in assets and $994.5 million in liabilities as of Sept. 25, according to court documents. Lee’s largest unsecured creditors listed in the filing are $1.7 million owed to Alberta Newsprint Sales and $1.3 million owed to North Pacific Paper Co.

The company also has secured a $40 million line of credit to finance operations during the restructuring.

Unlike bankruptcies by other publishers, Lee will shed no debt and it will pay a higher interest rate to all lenders. In return, lenders agreed to extend the loans — now due in April — until at least December 2015. The plan also preserves most of the stock’s value.

Lee also is ceding a 13 percent ownership stake to three creditors: Goldman Sachs, Monarch Master Funding Ltd., and Franklin Templeton/Mutual Quest Fund.

The newspaper publisher says the refinancing plan is needed to keep it in business.

“Our ability to operate as a going concern is dependent on our ability to obtain approval by the U.S. Bankruptcy Court of the refinancing plan approved by creditors and to generate cash flows and maintain liquidity sufficient to service our debt,” the company said Friday in its annual report.

Lee’s newspapers turn an operating profit, and the company has been making its debt payments. But Lee has been struggling for months to refinance the debt before it comes due in April.

©2011 the St. Louis Post-Dispatch

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