GateHouse Media Inc., which is set to manage the Dow Jones Local Media Group, a unit of 33 publications that was recently purchased by debt investor Newcastle Investment Corp., will file a prepackaged bankruptcy plan if it can get enough creditor support.
As part of a restructuring plan coordinated with its largest debt holder, Newcastle, GateHouse will file for bankruptcy if it can get holders of 67 percent of its debt to agree to the plan.
NewCastle owns about 52 percent of GateHouse’s debt. The New York-based investment company bought the Dow Jones Local Media Group in September, which owns 33 publications that GateHouse will manage.
Under the terms of the deal, disclosed in a Sept. 11 filing with the U.S. Securities and Exchange Commission, Newcastle would offer to purchase GateHouse’s outstanding debt in cash for 40 percent of its face value. Debt holders could either accept the offer, receive common stock in a new holding company that will own the reorganized GateHouse, or receive the net cash proceeds, if any, from a new debt facility.
Newcastle would contribute its interests in the Dow Jones Local Media group to the holding company in exchange for common stock in the group. For purchasing GateHouse’s outstanding debt from debt owners, Newcastle would receive a pro rata share of the holding company’s common stock, and the net proceeds, if any, of a new debt facility. Pension and other unsecured claims of the company would be paid in full as part of the plan.
GateHouse, as part of the deal, would try to raise a new $150 million debt facility for the reorganized company. That facility is not a condition to the restructuring.
The Fairport, N.Y.-based company has about $1.28 billion in debt. GateHouse owns the Wicked Local group of websites in Massachusetts, publishes The Herald News, based in Fall River, Mass., and the Saugerties Post Star, based in Saugerties, N.Y., and many other publications. The company has seen declines in print advertising revenue as audiences move from print to the Internet and mobile devices.
For more on GateHouse and last week's edition of Turnaround Tuesday, see “GateHouse to Follow Other Print Organizations into Bankruptcy.”
Calls to GateHouse and Newcastle were not immediately returned.
For other struggling companies, see Mergers & Acquisitions' Distressed Company Watch List.