Is 'Florida Times-Union' Parent Headed For Bankruptcy Next Week?
By Mark Fitzgerald
Published: April 03, 2009 11:28 AM ET
CHICAGO It could be a very Blue Monday for Morris Publishing Group April 6 as the publisher of The Florida Times-Union in Jacksonville and a dozen other dailies bumps up against a deadline to make a loan payment it apparently cannot afford.
Struggling under a debt load of nearly $413 million, Augusta, Ga.-based Morris missed an interest payment of $9.7 million under its biggest credit agreement back on Feb. 1. Since then, Morris has been operating under "forbearance" agreements from its lenders that temporarily waive the serious penalties for skipping the payment.
The forbearance agreement expires at 5 p.m. EDT Monday, and Morris must either make the $9.7 million payment or negotiate another payment waiver -- or it could be forced to immediately pay as much as $411.7 million.
"We do not have the resources to make such a payment," Morris says in a filing earlier this week with the U.S. Securities and Exchange Commission (SEC).
In the annual report to the SEC, Morris and its auditor, Deloitte & Touche say they are uncertain if Morris can continue as a "going concern."
"The company has short-term obligations that cannot be satisfied by available funds and has incurred violations of debt covenants that subject the related principal amounts to acceleration, all of which raise substantial doubt about its ability to continue as a going concern," the auditors note says.
The annual report at various places suggests bankruptcy is one possible outcome for its financial fix, but does not explicitly say that it is under consideration. A message seeking comment from Craig Mitchell, Morris' senior vice president of finance was not returned.
In late January, Morris hired Lazard Freres & Co. LLC as its financial advisor, and Neal, Gerber & Eisenberg LLP, a law firm with an extensive bankruptcy practice, as its legal counsel.
"These firms will assist us in evaluating our strategic options regarding Morris Publishing's existing capital structure," Morris Chairman William S. Morris III said in a statement at the time.
Another deadline looming over Morris is a requirement to sell, or reach a binding agreement to sell, some asset by March 31, with the proceeds going to pay down debt.
"We may not be able to consummate the mandatory transaction required by Amendment No. 3 to our Credit Agreement," Morris says in its filing.
Morris also said it does not expect to be rescued by the family-owned Morris Communications, its parent until a corporate restructuring in January put it under the roof of an entity called Shivers.
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Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is E&P's editor-at-large.
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