The owner of the Philadelphia Inquirer and Philadelphia Daily News filed for bankruptcy protection on Sunday in an effort to restructure its debt load.
Philadelphia Newspapers Inc, owned by Philadelphia Media Holdings LLC, is the second newspaper company in two days, and fourth in recent months, to seek bankruptcy protection.
“This restructuring is focused solely on our debt, not our operations,” chief executive officer Brian Tierney said in a statement. “Our operations are sound and profitable.”
The filing on Sunday indicated the company had between US$100 million and US$500 million in assets and liabilities in the same range. The company said it would continue the normal operations of its newspapers, magazines and online businesses without interruption during the debt-restructuring process. In a story posted on its Web site on Sunday, the company said it had a debt load of US$390 million.
The company said it will continue the normal operations of its newspapers, magazines and online businesses without interruption during the debt-restructuring process. In a story posted on its Web site on Sunday, the company said it had a debt load of US$390 million.
“In the last two years, we experienced the rare trifecta of a dramatic decline in revenue, the worst economic crisis since the Great Depression and a debt structure out of line with current economic realities,” Tierney said.
The filing is the latest blow to newspapers. The Journal Register Co filed for bankruptcy on Saturday. The Chicago-based Tribune Co sought bankruptcy protection in December and the Star Tribune of Minneapolis followed suit last month.
Tierney said the company’s goal was to bring its debt in line with “the realities of the current economic and business conditions.” The company said it decided to turn to bankruptcy court after negotiating with its lenders for the last 11 months.
The filings reiterate that the newspaper company hopes to reconfigure its debt rather than restructure its operations. The company was profitable by one accounting measure last year, earning US$36 million before interest, taxes, depreciation and amortization, and excluding one-time items. That figure is expected to be at least US$25 million this year.
Tierney said in his statement that, in conjunction with its filing, the company is seeking court approval of up to US$25 million in debtor-in-possession (DIP) financing. The proposed DIP financing, plus the cash flow from operations, will ensure the company’s ability to satisfy obligations associated with its normal course of business, including wages and benefits, as well as payment of post-petition obligations to vendors under existing terms.
The company has long sought to offset declines in advertising revenue and circulation with moneysaving moves and improved efficiency, including sharing editorial functions of the two papers’ newsrooms.
The Newspaper Guild of Greater Philadelphia notified its union members of the filing in an e-mail on Sunday night.
The e-mail tells members to stay calm and report for work and that “the company is still in business, the papers are still publishing.” The communication tells Guild members the union contract remains in full force and that workers’ wages and benefits will continue to be paid.
A group of investors led by Tierney bought the two Philadelphia papers for US$562 million in June 2006.