MediaNews Group has struck agreements with its lenders that will allow it to put off principal payments on its debt. The publisher, which owns The Denver Post and 50 other papers, did not make its March 31 payment, NYT reported, citing sources briefed on the situation. Back in December, Moody's Investors Service downgraded MediaNews' credit rating to junk status on fears the worsening economic climate will squeeze the publisher even tighter. The ratings action affects $962 million worth of debt.
At the time, MediaNews CEO Dean Singleton rejected contention that the company was approaching the kind of leverage that led Tribune Company to seek bankruptcy protection. Since most of MediaNews' debt is held by Hearst, which also has a stake in the company, Singleton believed that the company would have little trouble coming to an agreement. The new payment schedule MediaNews reached with Hearst, and with other lenders, led by Bank of America, will help preserve the company's cash.
So while it looks like it will avoid the fate met by Tribune and Sun-Times Media Group, which filed for bankruptcy protection this week, MediaNews' financial position isn't exactly healthy. For one thing, MediaNews bonds carrying a 6.375 percent coupon and maturing in 2014 recently traded at a penny, NYT noted, citing data from Finra.
By David Kaplan