By: Joe Strupp A U.S. bankruptcy court judge has approved a plan for the Star Tribune of Minneapolis to emerge from bankruptcy through a reorganization, the paper reported Thursday. The plan still requires a vote of the paper's creditors next week.
If it is approved, as expected, the newspaper's owners likely will emerge from bankruptcy as soon as Sept. 17 as a new entity, with new owners and only $100 million in debt, the story said. That would be eight months after it filed for Chapter 11 protection when it failed to service a debt load of approximately $500 million.
The Star Tribune also is expected to announce a new publisher and board of directors before it emerges from bankruptcy.
"According to the proposed reorganization plan, a small group of perhaps 10 debt investors -- primarily financial professionals who aim to profit from distressed assets -- will take over 95.5 percent of the company and select the new management and director team," the paper reported. "These are the so-called senior note holders owed about $400 million by the Star Tribune. That debt will be pared to $100 million in the new company. The executive search is underway."
The debt continues trading in financial markets, so it is not known exactly how many investors exist, or who they are, until votes are tallied Sept. 3.
Angelo Gordon & Co., a New York investment firm that has an interest in distressed media companies, is believed to be the second-largest investor. The firm also owns debt or equity stakes in the Tribune Co., Philadelphia Newspapers and American Media Inc., publisher of the National Enquirer, the story said.
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