NEWS - Banking & Finance

Company Announces it Will File by Next Week

By Lou Phelps
SDN Staff

Weds. Jan 13, 2010 -- Morris Publishing Group, LLC announced today that it has failed to receive the required 99 percent support for a proposed restructuring plan to avoid being forced into bankruptcy by a group of bondholders owed $ 278.5 million plus over $ 20 million in interest payments.

The company will file for Chapter 11 bankruptcy on or before Jan. 19, 2010, with a prepackaged plan of reorganization, stating that the company has secured support for the plan from a portion of the lenders.

However, the plan must be accepted by the federal bankruptcy courts, after hearing arguments from all vendors and lenders of the company. The courts will determine whether the company "is a going concern," including whether the company is able to make the interest payments included in the company's proposed reorganization plan.

Morris has had a number of losing financial quarters despite deep cuts in payroll and personnel costs over the past 12 months, and has not make any interest payments to the bondholders or on other short term debt lenders. The short-term debt facilities had been providing the company with liquidity.

If accepted, the plan will allow Morris Publishing to exchange $100 million in new debt for $278.5 million in existing debt, and would not have "any noticeable impact on Morris' ongoing operations," according to the company.

In a press release Wednesday, the company writes, "Morris had offered to exchange $100 million in new second-lien secured notes for $278.5 million in outstanding 7 percent senior subordinated notes, but that offer required that 99 percent of existing notes be tendered. That condition was not met by a Jan. 12 deadline, so Morris has terminated the offer."

In addition, the bankruptcy code requires acceptance by at least two-thirds (2/3) in amount and more than one-half (1/2) in number of holders of claims of such class who vote on the plan. Morris has achieved the 2/3 threshold of the amount owed the lenders of $209 million "but has not specifically announced whether the ? of the lenders threshold has been met.

For almost a year, through a series of forbearance extensions on the interest payments, a group of lenders have never agreed to what the Morris family was offering.

The assets of the Morris Publishing Group, LLC were last reported as a total of $171 million. However, a number of other companies are owned by the Morris family which have been pledged to secure the debt.

This fall, the Morris' outdoor billboard company was sold for more than $100 million. That cash was pledged against the company's $135 million in other loans, as part of the offer to the bondholders of the $278 million plus interest owed.