hursday, May 14, 2009, 3:46pm EDT | Modified: Thursday, May 14, 2009, 4:02pm
Morris Publishing faces payment deadline
Atlanta Business Chronicle - by J. Scott Trubey Staff Writer
Morris Publishing Group LLC faces an important deadline within two weeks to pay off a long-delayed interest payment, but doubts remain if the Augusta, Ga.-based newspaper company can continue as a going concern.
Morris Publishing must make a $9.7 million interest payment by May 28. If it can’t or is unable to buy time, creditors could force Morris Publishing, or its guarantor Morris Communications, to repay the balance of bonds, interest and a revolving line of credit totaling $419 million, according to a Thursday Securities and Exchange Commission filing.
“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 its first quarter earnings statement. “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.”
The company had about $171 million in assets at the end of the first quarter.
Morris Publishing spent $2.8 million on advisers in the first quarter March 31 seeking to refinance its debt, according to the SEC filing.
Slumping advertising revenues caused by the recession and changing media appetites have hurt Morris Publishing and other newspaper companies throughout the United States.
In the first quarter ended March 31, Morris Publishing lost $12.6 million compared to a $5.6 million profit in the first quarter of 2008, according to the SEC filing. Quarterly revenues plummeted 22.4 percent year-over-year from $82.7 million to $64.2 million. Advertising revenue fell 29.2 percent for the quarter.
Morris Publishing said in the filing given the volatile credit markets and economic conditions, the company is likely to be “dependent on the ability of Morris Communications or its guarantor subsidiaries” to refinance its senior debut, raise capital to purchase the loans from existing creditors or raise capital “to refinance the senior debt with a new loan.”
Even if the company is able to make the May 28 interest payment, Morris Publishing said it is at risk of being in non-compliance with financial covenants, which have been relaxed by the creditors. The company is also “unlikely to meet the financial covenants under the Credit Agreement when the Company and Morris Communications deliver their consolidated financial statements for the second quarter of 2009, no later than August 29, 2009,” when its relaxed financial covenants terminate.
If the company cannot amend or refinance the debt before then, Morris Publishing would be prevented from borrowing on its revolving credit line and “may be required to prepay the entire principal due under the Credit Agreement” at that time.
Morris Publishing’s lenders are JPMorgan Chase Bank, The Bank of New York, SunTrust Banks Inc. (NYSE: STI), Wachovia Bank, Bank of America (NYSE: BAC), General Electric Capital Corp., Allied Irish Banks, RBS Citizens, Comerica Bank, US Bank, National Association, First Tennessee Bank, National Association, Webster Bank, National Association, Keybank National Association, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank Ltd.
Morris Publishing, is the parent of 13 daily newspapers including The Augusta Chronicle and The Athens Banner-Herald. The company also owns numerous non-dailies, city magazines and free publications.
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