Journal Register Co., a newspaper publisher in bankruptcy for a second time, won court approval to sell its assets to an affiliate of its current owner in exchange for $114 million in secured debt and about $6 million in cash.
U.S. Bankruptcy Judge Stuart Bernstein in New York today overruled a union, part of the Communications Workers of America, that had objected the deal with the buyer, 21st CMH Acquisition Corp.
“In light of fact that the transaction will not close until after the termination of the collective bargaining agreements, the court overrules the unions’ objection,” Bernstein said in his written ruling. The union contract expires on March 31.
The sale moves Journal Register a step closer to winding down and resolving the Chapter 11 case it started in September. The company, which publishes the New Haven Register in Connecticut and other regional titles, delivers local news and other information to about 1,000 communities in 10 states and reaches 21 million people a month, according to its website.
Journal Register chose CMH as the buyer because it was the company’s only “stalking-horse” bidder. A February auction was canceled due to a lack of other potential buyers and objections by most other union groups were resolved before the hearing, the company said in court papers.
CMH is an affiliate of funds managed by Alden Global Capital Ltd., which acquired two Journal Register loans totaling $152 million in the previous bankruptcy in 2009. The debt exchange is called a credit bid, in which buyers offer the value of the secured debt they are owed in exchange for assets.
The company’s sale agreement includes severance and paid time off for employees who lose their jobs as a result of the deal, the assumption of liabilities totaling $22.8 million and other costs, according to an amended sale agreement filed with the court on March 15. The deal’s total value wasn’t cited.
The company won court approval last year to borrow as much as $25 million from Wells Fargo & Co. (WFC:US) to fund operations while in court protection.
Journal Register, based in Yardley, Pennsylvania, listed assets of $235 million and debt of $268.6 million in its Chapter 11 papers last year. The debt included about $13.2 million on a revolving credit owing to Wells Fargo, according to court papers filed at the time.
The company’s newspapers include the Delaware County Times and the Trentonian near Philadelphia, the Oakland Press in Michigan, the Daily Freeman in Kingston, New York, the Register Citizen in Connecticut and the News-Herald outside of Cleveland.
The publisher previously sought court protection in February 2009, at the time listing debt of as much as $1 billion. Journal Register exited bankruptcy about six months later under the terms of a prenegotiated reorganization plan.
The case is In Re Journal Register Co., 12-13774, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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