Morris Publishing, Canwest Skip Debt Payments But Avoid Bankruptcy
By Mark Fitzgerald
Published: August 03, 2009 12:12 PM ET
CHICAGO By Monday, two newspaper publishers struggling with big debt -- Morris Publishing Group and Canwest Global Communications Corp. -- were each supposed to make substantial interest payments. Both say they will skip the payments -- and that, for now, their creditors are fine with that.
Lenders to both publishers have agreed not to enforce until at least Aug. 14 provisions that could force the two chains into bankruptcy.
On Monday, Canwest, whose subsidiary Canwest Limited Partnership publishes a dozen dailies and 26 community papers in Canada, announced it had skipped a US$18.5 million interest payment due Aug. 1 on senior subordinated notes maturing in 2015. The default could have triggered costly demands for repayment, although Canwest noted that under terms of these particular notes, lenders could not demand immediate repayment of the entire $400 million in debt before Sept. 1.
Canwest said the ad hoc committee of noteholders agreed to extend discussions on recapitalizing the Canadian media giant, and to extend until Aug. 14 a "forbearance" period in which lenders agree not to enforce certain requirements of the loans.
Similarly, Morris, publisher of The Florida Times-Union in Jacksonville and a dozen other papers, said it would not make a $9.7 million interest that comes due Monday, nor had it made a $9.7 million payment that was due last Feb. 1 by the July 31 deadline imposed by its bankers.
The banking group, led by JPMorgan Chase, extended a forbearance period for the ninth time this year. Without the agreement, the non-payments could have triggered "cross-default" provisions of its loans under which creditors could demand immediate repayment of Morris's $419 million in long-term debt.
Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is E&P"s editor-at-large.
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