By: Mark Fitzgerald Liberty Group Publishing Inc. served notice last week that it is reaching for a new stage of growth. The small-town newspaper publisher -- which in its first two years ballooned to 330 papers from 160, only to sit out these last two years with no acquisitions at all -- filed for a $225-million initial public offering (IPO) of common stock that would be listed on the Nasdaq Stock Market.
In its filing with the U.S. Securities and Exchange Commission (SEC), the Northbrook, Ill.-based chain said it would continue to follow a "disciplined acquisition program" to add to its 67 paid dailies, 140 paid nondailies, and 123 total-market-coverage publications.
IPO proceeds will be used to buy up senior discount debentures and senior preferred stock, 78% of which is held by Liberty's principal owner, Leonard Green & Partners. The Los Angeles-based investment group financed Liberty's 1998 startup with a $310-million acquisition of 160 papers from Hollinger International Inc.'s old American Publishing Co. subsidiary.
The IPO's timing, the initial stock price, and the number of common shares to be offered were not revealed in the SEC filing. Liberty cannot comment on the filing because of the SEC-mandated "quiet period" before an IPO. Credit Suisse First Boston Corp. and Bear, Stearns & Co. Inc. are the co-lead underwriters.
The SEC filing portrays a high leveraged company with double-digit cash-flow growth over the past few years. Last year, the filing said, Liberty had earnings before interest, taxes, depreciation, and amortization of $42.8 million, as it recorded a net loss of $19.7 million on revenue of $195.2 million.
Standard & Poor's reacted to the IPO filing last week by placing Liberty long-term corporate credit and senior unsecured debt on its CreditWatch "with positive implications."
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