Not very surprisingly, my former employer, MediaNews Group, is in workout. Surprisingly, this could turn out to be an opportunity to craft a truly new kind of news enterprise. Bear with me.
As reported first by the New York Times, later in the Wall Street Journal and in the Denver Business Journal, the country’s fourth-largest (by circulation) newspaper publisher has won a forbearance agreement from the lenders to which it owes $1 billion, plus or minus spare change. The lending group, led by Bank of America, is allowing MediaNews to skip its March 31 debt payment while it “attempts to reorganize its capital structure.”
This confirms that MediaNews is in default — forbearance agreements are designed to postpone foreclosure, and lenders don’t threaten to foreclose unless the borrower is in default of one or more loan covenants. Covenants breaches can entail failure to maintain certain balance sheet ratios rather than actually being short of cash, but they’re serious issues and call into question the ability of the enterprise to maintain its “going concern” status.
As it happens, I’ve had the personal pleasure of going through the workout process (in connection with the travails a small newspaper group now owned by MediaNews), and it’s not fun. I’m sure MediaNews CEO Dean Singleton (that’s him in the picture) never thought he’d find himself in this situation.
Continue reading this post at Nieman Journalism Lab.