Morris Publishing files for Chapter 11 bankruptcy protection, plans to lower debt

Newspaper publisher Morris seeks Ch. 11 protection

AUGUSTA, Ga. — Newspaper owner Morris Publishing Group filed for bankruptcy protection Tuesday as part of a plan worked out with creditors to cut its debt by about $288.5 million.

The privately held owner of 13 daily newspapers including The Augusta Chronicle and Savannah Morning News announced last week that it would file a “prepackaged” plan, approved by a majority of its creditors, in federal bankruptcy court.

Its filing Tuesday comes as the holding company for MediaNews Group Inc., owner of The Denver Post and San Jose Mercury News, is working out its own Chapter 11 plan with creditors. More than 10 other newspaper publishers have filed for bankruptcy protection since December 2008.

Newspapers struggled during the recession as advertisers pulled back on their spending and readers continued their shift to online news. These trends have made it harder for some publishers, such as privately owned MediaNews and Morris, to repay debts they took on for acquisitions during better times.

The company’s plan lowers Morris’ overall debt to $126.5 million from about $415 million. The restructuring plan includes a bond exchange that would trade the company’s existing unsecured debt for $100 million in new bonds — erasing $178.5 million owed to creditors.

The restructuring plan would allow Morris’ owners to maintain control of the company after emerging from Chapter 11. Bondholders would receive no equity in the company in the exchange. But the new debt would carry a higher interest rate of 10 percent to 15 percent.

“Once the restructuring is finalized and approved by the court, we will be on much firmer financial ground,” said Sandra Sternberg, a Morris spokeswoman.

The exchange must be approved by the U.S. Bankruptcy Court for the Southern District of Georgia. Judge John S. Dalis approved the company’s request to continue paying employees and vendors at a hearing Tuesday afternoon.

Morris said about 93 percent of existing noteholders voted in support of the reorganization plan, short of the 99 percent the company needed to settle its debt out of court.

Morris’ court filing said the company has $175.5 million in total assets and $482.4 million in liabilities.

Court documents list Wilmington Trust FSB as the company’s largest unsecured creditor, pegging the company’s claim at $278.5 million. Newsprint vendor Abitibi-Consolidated Sales Corp. claims it is owed $365,000 and more than a dozen other creditors are claiming accounts of less than $100,000.

Sternberg said the company expected no interruption in normal business and hoped to emerge from Chapter 11 in six to 12 weeks. Morris has 1,847 full-time employees and 335 part-time workers.

Morris Publishing is a former subsidiary of Morris Communications LLC. A reorganization in January 2009 left Morris Communications as an affiliate of Morris Publishing Group, but no longer its parent company.

The Morris newspaper group started in the 1940s when William S. Morris Jr. purchased The Augusta Chronicle, where he began working as a bookkeeper in 1929. His son, William S. Morris III, is Morris Publishing’s chairman and his grandson, William S. Morris IV, is the company’s CEO.

The company has daily newspapers in eight states — Alaska, Arkansas, Florida, Georgia, Kansas, Minnesota, South Carolina and Texas — as well as more than 60 non-daily newspapers and magazines. The Florida Times-Union is the company’s largest newspaper, followed by The Augusta Chronicle and the Savannah Morning News.