By: Mark Fitzgerald
American Community Newspapers (ACN) — publisher of the Stillwater (Minn.) Gazette and Plano (Texas) Star Courier plus dozens of non-dailies in four states — said late Tuesday it had filed for Chapter 11 bankruptcy protection.
Under the prepackaged bankruptcy, ACN’s secured creditors will be providing a $5 million debtor in possession credit facility.
The creditors are the “contemplated stalking horse bidder for ACN’s assets,” ACN said.
ACN said that, with the support of its lenders, it will reorganize under the so-called 363 sale process, which will free the newspapers and other properties of the debt that makes them unattractive buys.
“While we have proactively managed our business by right sizing our cost structure and driving efficiencies to maximizing our cash flows our operations are not able to support our current capital structure,” Chairman and CEO Gene Carr said in a prepared statement.
ACN becomes the seventh newspaper publisher to file for bankruptcy since December 2008 when Tribune Co. filed for Chapter 11 protection. Since then, bankruptcy petitions have been filed by the parent companies of The Philadelphia Inquirer and Minneapolis Star Tribune; Sun-Times Media Group; Journal Register Co.; and the alternative weekly chain Creative Loafing.
Like nearly all of those companies, ACN got into trouble taking on debt for acquisitions that proved unable to generate sufficient cash to draw down the loans. Last summer, it disclosed it had violated debt-to-cash flow covenants in its credit agreement as its debt load of $136 million overwhelmed cash flow.
ACN stock crashed, and it was delisted from the American Stock Exchange last fall. It is now quoted on the Pink Sheets under the symbol ACNI. It last traded April 24 for a penny a share.
Dallas-based ACN said it will continue to publish its paper with “no change in the company’s day to day operating activity.” ACN publishes in four markets: Minneapolis/St. Paul; Dallas; the Northern Virginia suburbs of Washington, D.C.; and Columbus, Ohio.