Lee Enterprises near bankruptcy

I couldn't find a link anywhere and I know posting whole stories is frowned upon, but I felt this was newsworthy. God bless us all, every one.


Lee Enterprises suspends dividends as ads weaken
By ANICK JESDANUN
AP Business Writer
NEW YORK (AP) — Lee Enterprises Inc., struggling like all other newspaper publishers from plunging revenue in a weakening economy, said Thursday it was suspending dividend payments and paying higher interest rates to gain more flexibility with lenders.
A new credit agreement with lenders changes the formula-based financial targets that Lee must meet to avoid technical default, which ultimately could force the company to sell assets or declare bankruptcy. It raises one threshold and lowers another to account for reduced cash flow.
The new agreement also reduces Lee's revolving credit line to $375 million, from $450 million. The company said it had drawn only $207 million as of Sept. 30.
As part of the agreement, Lee cannot pay dividends until it can lower debt to no more than 4.5 times its cash flow, not expected before September 2010. The new terms let Lee take on debt of as much as 6.75 times its cash flow.
Although Lee and other newspaper companies have been paying off debt, the reduction hasn't been as fast as the decline in advertising revenue, causing what's known as the leverage ratio to approach or exceed the maximum permitted.
The changes and new agreement with lenders are similar to those obtained over the past two months by The McClatchy Co., A.H. Belo Corp. and Morris Publishing Group LLC. Gannett Co. also said last week it was nearing a new deal with lenders.
Freedom Communications Inc. has said it likely missed targets for the July-September quarter and was in talks with lenders, while Media General Inc. said it has begun negotiations because its projections show the company coming ``too close for comfort'' in upcoming years as revenue keeps dropping.
In Lee's case, Chief Financial Officer Carl Schmidt said the company likely met its targets for the fiscal year that ended in September. However, the old agreement had called for tighter requirements to start in the current quarter.
``Accordingly, given the uncertainty of the current economic environment, we and our lenders believed certain adjustments were appropriate at the present time,'' he said in a statement. ``It is encouraging that even in a tumultuous credit environment, such amendments can be obtained.''
Lee, which reports its fiscal fourth quarter earnings on Nov. 13, had $1.24 billion in net debt as of June 29, much of it a result of its 2005 acquisition of Pulitzer Inc.
Mary Junck, Lee's chairman and chief executive, said the suspension of dividends, while mandated under the new agreement, should produce annual savings of $34 million to further reduce debt.
Separately, Belo Corp., a television station operator that spun off its newspaper operations into A.H. Belo Corp. this year, said Wednesday it drew down $364 million from its revolving line of credit to pay off a similar amount of other debt due Nov. 3.

 

Re: Lee Enterprises on the brink

In the short-term-financial-health department, that's actually probably not a bad thing, as it makes Lee much less likely to default on its debt covenants, which would be a very bad thing that could well lead to bankruptcy filings, massive layoffs, etc.
And their stock's already in the tank, so cutting dividends won't be too big a blow.
But it doesn't speak too highly of the company's cash flow. They're pouring a lot of money into the debt on that Pulitzer acquisition.

 

Re: Lee Enterprises on the brink

I wonder if Ms. Junck will return her 17.8% raise (she's now at $3.4 million) she recently got

 

Re: Lee Enterprises on the brink

Lee's in trouble like everybody else, but seems a bit of a stretch to say they're on the brink. They're in the same boat as McClatchy, Belo, Gannet, etc. Sure, any or all could easily go bellyup by the end of the year, but I don't see how Lee's in any worse shape than anybody else. Lee's stock price was up 13 percent Thursday, and although still probablly down like 90 percent from five years ago, I don't think the company's stock would have gone up at all if this report spelled the doomsday scenario implied by the thread.

http://finance.yahoo.com/q?s=LEE

 

Re: Lee Enterprises on the brink

Today's news came out after the market closed. Check back this time tomorrow.

 

Re: Lee Enterprises on the brink

13 percent!
SELL SELL SELL!

 

Re: Lee Enterprises on the brink

 

Re: Lee Enterprises on the brink

stock prices and circulation numbers were significantly better before a lot of these "buyouts" of the past couple of years. Do the honchos who didn't do the "wink-wink-you're-safe" to a lot of veterans who bolted feel that the drudges left are great economonic boons to them?? Or has all of this proved that the no-talent suckups were worthless? Well, stockholders know they were, but how do the kings of cronyism feel?????

 

Re: Lee Enterprises on the brink

Why is the drop in circulation anything new? Hasn't it been going on for the past 25-30 years?

 

Well, now I know what tomorrow's super-secret newsroom meeting in my Lee shop is about.

 

Aw, do tell. I've got an application packet ready to send to a Lee paper for a prospective job. Is there something else I should know?

 

I was told yesterday, "We cut travel or we cut your job."

I'm sure they'll eventually cut my job anyway. Anybody got a noose?