Bloomberg News

Lee Negotiates With Goldman, Monarch on Loan to Avoid Bankruptcy

July 14, 2011

July 14 (Bloomberg) -- Lee Enterprises Inc., owner of the St. Louis Post-Dispatch, is offering lenders higher rates and equity interests to refinance debt in a bid to avoid bankruptcy, according to four people familiar with the matter.

Creditors Monarch Alternative Capital LP and Goldman Sachs Group Inc. are leading talks with the newspaper owner and its adviser, Blackstone Group LP, said the people, who declined to be named because the discussions are private. Lenders will also be asked to approve a pre-packaged bankruptcy, which the Davenport, Iowa-based company will seek if an out-of-court restructuring doesn’t gain enough support, the people said.

The publisher that owns Pulitzer Inc. has to refinance $1 billion of loans and bonds that mature in April 2012 after abandoning plans to sell $1.06 billion of high-yield notes in May. Its share price has plunged 62 percent in the past year as newspaper advertising revenues are squeezed by competition from the Internet and the U.S. economic recovery is restrained by a 9.2 percent unemployment rate.

“We are in substantive and productive discussions with key lenders about an extension of our credit agreement,” Mary Junck, Lee’s chairman and chief executive officer, said today in a statement that didn’t name the lenders or a pre-packaged bankruptcy plan. “Investor sentiment will improve when questions about our refinancing are resolved.”

Dan Hayes, a spokesman for Lee, didn’t immediately return a telephone message seeking comment. Representatives from Blackstone and Goldman Sachs said they couldn’t comment and a call to Monarch wasn’t returned.

--With assistance from Kristen Haunss in New York. Editors: Pierre Paulden, Alan Goldstein

To contact the reporters on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Alan Goldstein at agoldstein5@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net


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