It’s safe to say that traditional newspaper publishers are having a rough time these days. Revenues have collapsed as subscribers switch to online content and advertisers are spending less. Once great publishing giants like The Chicago Tribune, The Philadelphia Inquirer and The Journal Register Company have filed for bankruptcy in the last few years. With most newspaper publishers swamped in debt and burdened by heavy fixed costs, there will likely be many more victims in the future.
The Rundown
One of those once high flying publishers sitting on the brink is Lee Enterprises (LEE). Lee is struggling under almost $1.1 Billion in debt coming due in April 2012. While the company is profitable, making a profit of $46 million in 2010 and had strong cash flow of $106 million, it could all come crashing down if lenders are unwilling to refinance Lee's debt at favourable terms.
Lee has been shopping for a deal for over six months and has met with over 150 potential investors. While debt-refinancing proposals have been made, management has declined them, citing poor market conditions and unfavourable terms from investors.
On May 5, 2011, CEO Mary Junck released a letter to shareholders after the company decided to withdraw its private placement refinancing plans. In the letter, Junck explains that analysts are being unfairly “pessimistic” about the company’s “prospects,” and that a recent revenue shortfall was only a “temporary.” She states that Lee has “reduced debt by $732 million since June 2005” and expects “revenue trends will improve again as economic conditions” improve.
Investors are obviously not as enthusiastic. Shares have dropped by 70% in the last three months. On July 8, 2011 the company received a delisting warning from the NYSE as its share price is below $1. Furthermore, despite the rosy outlook recently mentioned by the CEO Mary Junck, on July 15, 2011 Lee revealed that Q3 revenue would decline again, coming in at “4.2 percent below the same period for the prior year.”
Read More:http://seekingalpha.com/article/280088-will-lee-enterprises-go-bankrupt
The Rundown
One of those once high flying publishers sitting on the brink is Lee Enterprises (LEE). Lee is struggling under almost $1.1 Billion in debt coming due in April 2012. While the company is profitable, making a profit of $46 million in 2010 and had strong cash flow of $106 million, it could all come crashing down if lenders are unwilling to refinance Lee's debt at favourable terms.
Lee has been shopping for a deal for over six months and has met with over 150 potential investors. While debt-refinancing proposals have been made, management has declined them, citing poor market conditions and unfavourable terms from investors.
On May 5, 2011, CEO Mary Junck released a letter to shareholders after the company decided to withdraw its private placement refinancing plans. In the letter, Junck explains that analysts are being unfairly “pessimistic” about the company’s “prospects,” and that a recent revenue shortfall was only a “temporary.” She states that Lee has “reduced debt by $732 million since June 2005” and expects “revenue trends will improve again as economic conditions” improve.
Investors are obviously not as enthusiastic. Shares have dropped by 70% in the last three months. On July 8, 2011 the company received a delisting warning from the NYSE as its share price is below $1. Furthermore, despite the rosy outlook recently mentioned by the CEO Mary Junck, on July 15, 2011 Lee revealed that Q3 revenue would decline again, coming in at “4.2 percent below the same period for the prior year.”
Read More:http://seekingalpha.com/article/280088-will-lee-enterprises-go-bankrupt
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