Morris Publishing Eyes Debt Restructuring
Publisher has reached an agreement with holders of 75% of its senior notes.
Augusta, Georgia-based newspaper and city magazine publisher Morris Publishing Group said late Friday that it has agreed with the holders of more than 75 percent of its senior subordinated notes on a debt restructuring.
According to terms of the agreement, holders of Morrisâ€™ $278.5 million in outstanding notes would exchange those existing notes for $100 million in new, second lien secured notes. At the same time, Morris â€śaffiliatesâ€ť would â€śmake capital contributions and repay indebtedness to Morris Publishing in order to cancel $110 million of its $138.75 million in existing senior secured indebtedness,â€ť the company said.
It was not immediately clear who the affiliates are. Craig Mitchell, Morrisâ€™ senior vice president of finance, did not immediately return a request for comment.
Morris also said it reached agreement with holders of more than 80 percent of its senior notes to again extend two semi-annual interest payments of $9.7 million on its senior subordinated notes until October 16. The payments originally were due February 1 and August 1.
The company said the restructuring agreement is â€śsubject to the final negotiation and execution of the definitive legal documentation and other closing conditions.â€ť It was not immediately clear when those negotiations might take place.
According to Michael Alcamo, president of a New York City-based investment banking firm M.C. Alcamo & Co., the restructuring agreement is a positive move for Morris as well as its lenders. â€śBanks are increasingly trying to avoid a Cygnus or a Young Broadcasting scenario,â€ť he told FOLIO:. â€śThey have realized two things: First, that bankruptcy is a very bad outcome for a media business; and secondly, that the prospects for recovery and growth in 2010 and 2011 are excellent."
In January, Morris said it hired investment bankers Lazard Freres & Co. as financial advisor and Neal, Gerber & Eisenberg as legal counsel as the publisher explored its â€śstrategic optionsâ€ť concerning the companyâ€™s capital structure. The company was said also to be exploring a sale of its portfolio of nearly 20 city magazines, including Augusta, Athens, H magazine and Savannah. UPDATE: A spokesperson representing Morris said the company "was not and is not" exploring a sale of its magazines.
Morrisâ€”an affiliate of the Morris Communications Companyâ€”also publishes 13 daily newspapers.