By: The Associated Press
The holding company for newspaper publisher MediaNews Group filed for Chapter 11 protection Friday and expects to emerge from bankruptcy in a month or two.
Affiliated Media Inc., the privately held parent company for the owner of The Denver Post, San Jose Mercury News and 52 other daily newspapers, had said Jan. 15 it would be making the move. It said it had a deal with creditors that will cut its debt to $165 million from $930 million.
Lenders led by Bank of America would get most of the company’s stock, wiping out shareholders such as Hearst Corp., which held a roughly 30 percent stake in MediaNews’ newspapers outside the San Francisco Bay area.
MediaNews says its newspapers will not be affected by the Chapter 11 case and William Dean Singleton will remain chairman and CEO. Singleton and the company’s president, Joseph J. Lodovic IV, will own all class A shares, allowing them to choose a majority of the seven-member board of directors.
“By aggressively facing the challenges of the newspaper business, we will continue to deliver high-quality journalism and will prepare our newspapers for a promising future,” Singleton, who is also chairman of The Associated Press, said in a statement Friday.
A bankruptcy court in Delaware has to approve the plan.
The filing is one of at least 14 in the newspaper industry since December 2008. Publishers battered by the recession have struggled to manage debts left over from acquisitions they made in better times.
Hearst’s stake in MediaNews came about in a complicated deal to acquire The Monterey County Herald and St. Paul Pioneer Press from McClatchy Co. in 2006. Hearst invested $317.3 million in MediaNews, which then bought the two newspapers and the Torrance Daily Breeze from Hearst.
As part of the bankruptcy case, Hearst will get warrants that could converted into MediaNews stock in the future, MediaNews spokesman Seth Faison said.
Hearst spokesman Paul Luthringer declined to comment.
Bank of America spokeswoman Shirley Norton said the bank supports the Chapter 11 plan and “looks forward to a smooth procession though the bankruptcy court process.” She declined to comment on the bank’s plans for the company.