Judge clears Morris Publishing to emerge from bankruptcy, slashing debt by $288 million

Morris Publishing bankruptcy plan approved

AUGUSTA, Ga. — A federal judge Wednesday cleared the way for newspaper owner Morris Publishing Group to emerge from bankruptcy protection less than a month after it filed under Chapter 11.

Morris Publishing, owner of 13 daily newspapers including The Augusta Chronicle and Savannah Morning News, sped through the court after a year spent formulating a plan to shed $288.5 million in debt — or about 70 percent of its total of $415 million — and winning approval from the vast majority of its creditors.

Judge John S. Dalis took less than 20 minutes Wednesday to approve Morris’ prepackaged debt restructuring proposal after hearing no objections from creditors.

The plan lets Morris’ owners keep control of the privately held company, with creditors receiving no equity. Top-tier lenders will be repaid in full, while holders of $278.5 million in unsecured bonds will recoup 36 cents on the dollar.

Mark Berkoff, the company’s attorney, said Morris Publishing hopes to emerge from bankruptcy protection by March 1.

“We are delighted with the court’s decision,” said William S. Morris III, Morris Publishing’s chairman. “The restructuring process has been lengthy and difficult, especially for our dedicated and loyal employees.”

Morris Publishing is among at least 14 newspaper owners to file for bankruptcy protection since December 2008, as the recession caused advertisers to cut back on spending and readers shifted to online news. Those trends left Morris saddled with debt mostly accumulated from its acquisition of newspapers in the 1990s.

Morris’ bankruptcy filing Jan. 19 said the company has $175.5 million in total assets and $482.4 million in liabilities.

The restructuring plan approved Wednesday includes a bond swap that trades the company’s existing unsecured debt for $100 million in new bonds — erasing $178.5 million owed to creditors.

Morris has already paid back $110 million of $136 million in debt owed to banks using funds generated by the company’s sale of a majority stake in its billboard advertising business in October, company spokeswoman Sandra Sternberg said.

The company had worked since October to win the near-unanimous support from creditors needed to settle its debt out of court. About 93 percent of existing noteholders approved of its plan, just short of the 99 percent required.

“You made it easy for me,” Dalis said after approving the plan in court.

The company’s creditors included JPMorgan Chase Bank, Bank of New York, SunTrust Bank, Wachovia Bank, Bank of America, General Electric Capital Corp., Allied Irish Banks, RBS Citizens, Comerica Bank, First Tennessee Bank, Webster Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank.

Court documents show the company’s largest group of unsecured creditors are holders of $278.5 million in bonds, with Wilmington Trust FSB serving as their administrative agent.

Morris Publishing has 1,847 full-time employees and 335 part-time workers.

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 grandson, William S. Morris IV, is Morris Publishing’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 of Jacksonville is the company’s largest newspaper, followed by The Augusta Chronicle and Savannah Morning News.