Owner of Philly Papers Blames Leak For Interest Payment Story

By: Joe Strupp

Owners of the Philadelphia Inquirer and Philadelphia Daily News say someone wrongly leaked information from a private conference call earlier this week that resulted in a Standard & Poor’s report on the ownership missing an interest payment.

Jay Devine, a spokesman for Philadelphia Media Holdings, declined to confirm or deny the report that the company missed a June 1 interest payment on $85 million of loans and is in talks with lenders for relief. But he said the report was the result of an improper leak by someone involved in the conference call just days ago.

“The report was the result of someone breaking a confidence of a conference call that was held the other day between the bankers, our company and financial analysts,” he told E&P Friday, declining to say what day the call occurred. “We will express our disappointment and try to reiterate the fact that they are confidential discussions and private discussions and ask people to honor that confidence.”

Initial reports have stated that Philadelphia Media Holdings “did not maintain the necessary senior debt-to-cash flow ratio — which can happen when cash flow shrinks — required by its senior lenders, according to Standard and Poor’s Leveraged Commentary and Data unit,” AP reported. “As a result, senior lenders blocked the company’s interest payments to $85 million in junior loans held by another group of lenders. That’s because senior lenders, who hold at least $295 million in loans, want to preserve the company’s cash for repayment of its own loans.”

When asked who might have leaked the information, Devine said, “We don?t have any idea, we are disappointed that it was leaked.”

Brian Tierney, PMH chief executive, and Mark Frisby, executive vice president, did not return calls seeking comment Friday.

The Inquirer and Daily News Web site offered only a short report on the missed payment, stating: “Philadelphia Media Holdings LLC, which publishes the Inquirer, Daily News and philly.com, is negotiating changes in loan terms with Citizens Bank and other lenders, Standard & Poor’s Leveraged Commentary & Data debt news service told clients, citing unnamed industry sources. The company has been in technical default on a bank loan covenant; senior lenders on June 1 blocked payment to investors who hold the company’s mezzanine debt, S&P said.”

Devine said such talks with bankers and analysts are not unusual and sought to ease concerns about the company?s financial health: “We are always in discussions with our bankers and financial lenders about interest rates and interest payments and are looking for ways to be efficient.”

He also stated, when asked about the company’s well-being, “Nothing really has changed in the past six months for the company. We continue to try to increase our revenue and at the same time keep the editorial product improving.”

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