Augusta-based Morris Publishing Group, which operates 13 daily newspapers, including The Augusta Chronicle , was unable to obtain nearly unanimous support for its debt swap from creditors and intends to file Chapter 11 bankruptcy on or before Jan. 19.
The plan of reorganization is not expected to have any noticeable impact on Morris' ongoing operations.
"The Augusta Chronicle is not directly affected by this step and remains profitable despite headlines that might make some think otherwise. We continue to hire new employees, pay our bills and serve the community in new and exciting ways," said Don Bailey, Chronicle president.
In mid-December, the publishing company started an exchange of $100 million in new notes for its outstanding $278 million in old notes. The exchange offer expired Tuesday night.
For the out-of-court plan to be consummated, the company needed support from the holders of 99 percent of the debt. Morris Publishing said in September that it would seek a prepackaged bankruptcy if that threshold could not be reached.
In a filing with the Securities Exchange Commission on Wednesday, the company said it had obtained approval from 92 percent of its creditors.
A prepackaged bankruptcy means creditors approve the financial reorganization plan prior to filing, which also should shorten the time the case remains open in court. If the bankruptcy court approves the plan, all of the old debt and unpaid interest will be canceled and those creditors will receive a share of the new $100 million in debt, the newspaper and magazine publisher explained.
In its most recent quarterly report to the SEC, Morris Publishing said in November that it had net income of $711,000 in the third quarter of 2009. In the third quarter of 2008, it posted a loss of $163 million.
Chapter 11 bankruptcy allows management to continue operating a company while it attempts to reorganize its debts and its business operations. The other type of bankruptcy, Chapter 7, is where the company goes out of business and its assets are liquidated.
At least a dozen newspaper companies have filed for Chapter 11 during the recession, according to The Associated Press, including the Philadelphia Inquirer , the Tribune Co. in Chicago and the Star Tribune in Minneapolis.
One newspaper publisher, Pennsylvania-based Journal Register Co., successfully used a prepackaged plan. It filed for Chapter 11 in February 2009 and emerged from bankruptcy in August.
Reach Tim Rausch at (706) 823-3352 or email@example.com.
"For those of you worried about how this affects The Augusta Chronicle -- the flagship of the 13 daily newspapers owned by Morris Publishing -- there is minimal impact," Executive Editor Alan English says in his most recent blog post. Read it at blogs.augusta.com.