Monday, June 15, 2009, 4:27pm EDT | Modified: Monday, June 15, 2009, 4:29pm
Morris Publishing gets 7th payment extension
Atlanta Business Chronicle
Morris Publishing Group LLC has landed a seventh extension from its lenders on a long overdue $9.7 million interest payment on its senior subordinate notes, it reported Monday.
The struggling Augusta, Ga.-based publisher said the latest extension gives it until July 14 to make the payment, which was originally due on Feb. 1.
Morris Publishing's senior bank group also agreed to extend until July 14 the waiver of the cross default from the overdue interest payment on the senior subordinated notes.
On May 14, Morris Publishing acknowledged in a Securities and Exchange Commission filing that if it could not make the payment or buy more 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.
Morris Publishing is the parent of 13 daily newspapers including The Augusta Chronicle, The Savannah Morning News and The Athens Banner-Herald. The company also owns numerous non-dailies, city magazines and free publications.
In its May 14 earnings statement, Morris Publishing said “several factors relating to the company’s outstanding debt raise significant uncertainty about its liquidity and ability to continue as a going concern. 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.”
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. 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. 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 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.
On May 14, Morris Publishing said even if the company is able to make its latest payment, the company 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.
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