Augusta-based Morris Communications Co. sold a majority stake in its billboard advertising company today to a Washington, D.C.-based private equity investment firm as part of the debt restructuring plan for its newspaper group.
ACON Investments LLC bought Fairway Outdoor for an undisclosed amount. Fairway will be combined with Magic Media, ACONs outdoor advertising company, to form Fairway Magic Outdoor.
While the sale was consummated in conjunction with the financial restructuring of our newspapers, we are excited about partnering with ACON to more fully exploit the growth opportunities available in the outdoor advertising industry, said William S. Morris III, chairman of Morris Communications.
Morris Publishing Group, which owns The Augusta Chronicle and 12 other daily newspapers, is also a subsidiary of Morris Communications.
Morris Publishing has been negotiating with two groups of lenders: A group of bondholders that hold a portion of approximately $100 million in unsecured bonds and a group of major banks that hold approximately $136.5 million in secured debt.
When the restructuring is completed, $415 million in debt will be reduced to $126.5 million, the company said.
A majority of the holders of the $278.5 million in bonds has agreed to support an offer to exchange the bonds for new notes totally $100 million.
In a separate agreement, the $136.5 million in secured debt will be reduced by $110 million. Morris Publishing officials said available cash balances will be used to pay off the remaining $26.5 million.
In order to complete the deal, the consent of 99 percent of bondholders is needed.
Failing to achieve that, Morris Publishing will seek to consummate the deal through a prepackaged plan of reorganization, seeking approval from the bankruptcy court, the company said on its Web site, www.morrisrestructures.com. The company would, in that event, expect to emerge from bankruptcy proceedings without any perceptible change in operations or adverse effect on employees, vendors or customers.
The company has the support of 75 percent of those bondholders now.
An affiliate of ACON will own $19.7 million of the remaining debt, according to a Morris Publishing press release. Morris will maintain a minority stake in Fairway Magic Outdoor.
Fairway Magic Outdoor will control more than 19,500 billboard and poster displays in 22 states.
The combined company will have the increased scale and balance sheet strength needed to prosper in the current macro-economic climate, but more importantly, it will be able to continue providing customers with a cost-effective advertising medium for them to bolster and improve their bottom line as the economy turns, said Ken Brotman, a founding partner of ACON.
Founded in 1996, ACON and its principals have managed over $1.5 billion of capital.