By: Mark Fitzgerald
In a filing with the U.S. Securities and Exchange Commission (SEC) late Thursday, Augusta, Ga.-based Morris Publishing Group reported a first-quarter loss of $12.6 million — and warned its debt burden threatens its future as a “going concern.”
“Several factors relating to the company’s outstanding debt raise significant uncertainty about its liquidity and ability to continue as a going concern,” Morris Publishing said in the filing. “Specifically, the company’s debt far exceeds the current value of its assets, and the company’s creditors may have the right to accelerate the maturity of the debt before the end of May 2009.”
Morris listed total debt of $419.5 million, and assets of about $171 million.
Morris also noted it faces a critical deadline on May 28. Five times, Morris’ senior creditors, led by JPMorgan Chase bank, have allowed the parent of the Florida Times-Union in Jacksonville and a dozen other dailies to postpone a $9.7 million interest payment that was due Feb. 1.
If Morris cannot make the payment by May 28, and the lenders do not agree to another “forbearance” period, it could be forced to repay its entire debt.
But even if Morris is able to make the interest payment, the company filing said, it is “unlikely” to meet the financial covenants of its credit agreement when it reports second-quarter results in late August. Violating those covenants could also force Morris to repay the entire $419 million in debt.
More details on the debt situation are reported on E&P’s business-oriented Fitz & Jen blog.
Morris’ first-quarter loss of $12.6 million compares with a profit of $5.6 million in the same period a year ago. It said total revenues fell 22.4% to $64.2 million. Ad revenue was off 29.2% in the quarter, Morris said.