NEWS - Banking & Finance

SBJ Staff Report

Jan. 19, 2009 -- As expected, Morris Publishing Group LLC and 14 other affiliated companies that had been pledged against more than $ 278 million in bond debt, filed a series of petitions for Chapter 11 bankruptcy protection court Tuesday morning at the Richmond County courthouse in Augusta.

The filing states that the company has between 1,000 and 5,000 creditors, with specific information on the 20 largest. Number one is the banking consortium group, led by Wilmington Trust FSB, to whom Morris Publishing Group owes $278.5 million.

The remaining 19 largest creditors on the list are owed a total of $915,459, many of which are newsprint and ink suppliers or printers of newspaper inserts. Total debt to vendors is not provided, but the company states that it believes it will be able to pay its creditors, and that the filing will not affect its operations.

In Georgia, Morris Publishing Group, LLC. owes Doodad Southeast $ 13,468. The company, owned by Tom McCloskey, is in Austell and is a printer of newspaper inserts.

“The company is in bankruptcy court today, asking permission to pay both pre-petition and post-petition creditors in full,”according to Dave Satterfield, spokesperson for Morris with the company’s Los Angeles PR firm.

Morris seeks to join together what is actually 15 individual Chapter 11 bankruptcy protection filings into one unit. A trustee and/or examiner has not yet been named, but the company states that the process may be completed “within the next six to 12 weeks.”

The 17 documents filed Tuesday state that across the company’s 13 daily newspapers and myriad of other publications, the company is down to 1,847 full-time employees and approximately 335 part-time employees. At one point, the Savannah Morning News publicized that it had 550 employees in the Savannah area alone, according to the Savannah Chamber of Commerce’s annual report on the region’s largest companies.

“The Debtors believe that the Plan, once confirmed, will rationalize their balance sheet in a way that allows them to service their debt, fund future operations and support their long-term business plans,” according to the company’s bankruptcy documents. No specifics were given on reorganization plans that will produce needed cash flow to service interest payments and ongoing operations.

The company lost $13.2 million in the first nine months of 2009. The fourth quarter results, ending Dec. 31, 2009, have not been released. In February 2009, the company missed the first of two $ 9 million interest payments due in 2009 – the second was due in August 2009.

The $13.2 million loss in 2009 compares to a breakeven operation in 2008. The company took a $140 million write-down on the value of the company in 2008, however, which resulted in a reported loss of more than $140 million, but it was a “paper loss” versus negative EBITDA – actual cash flow from operations.

In fiscal year 2008, Morris recorded revenues of approximately $321.8 million. “More recently, for the nine month period ending September 30, 2009, the Debtors recorded revenues of $190.0 million (down from $243.1 million for the same period in 2008),” according to the bankruptcy documents.

Morris Publishing Group, LLC. is now reported to be worth approximately $175.5 million with total liabilities of $482.4 million.

The size of the liabilities includes $136.5 million owed to another group of borrowers. However, the Morris family sold off its billboard company in the fall of 2009, and is apparently being forced to put in the cash to reduce overall debt down to a total of $100 million, though there was no information in the bankruptcy filing on the loans.

The interest on the new $100 million in secured notes is anticipated to be $10 million annually, with a top end of $15 million.