After months of intense negotiations, Morris Publishing Group, owner of 13 daily newspapers in eight states including Texas has announced plans to file for Chapter 11 bankruptcy. The company plans to file a “prepackaged” bankruptcy plan that has already been approved by the majority of its creditors. If accepted by the bankruptcy trustee, the prepackaged bankruptcy plan could slash Morris Publishing’s debt of $415 million by nearly 70 percent.
Morris Publishing says it will ask a bankruptcy judge to approve a bond exchange that would trade the company’s existing unsecured debt for $100 million in new bonds – erasing $178.5 million owed to creditors…The company says it plans to further reduce its debt, after the bond exchange is approved, by paying back $110 million of $136 million in debt owed to banks using funds generated by the company’s sale of a majority stake in its billboard advertising business in October.
Morris Publishing’s debt woes and subsequent bankruptcy mostly stem from the debt accumulated when it acquired a slew of newspapers during the 1990s. A large debt load, coupled with the fact that advertising revenue and readership have dwindled in the last few year, the publishing giant has been unable to pay $194 million in interest on an unsecured bond debt of $278.5 million that was due in two semiannual payments in February and August last year. But it is still not clear whether or not Morris will be able to withstand the rapid changes taking placing the newspaper industry even after receiving the benefits of a Chapter 11 bankruptcy.