Brown Publishing files for bankruptcy
Monday, May 03, 2010 10:37 AM
Ohio-based Brown Publishing Co., owner of the Business Record, filed for bankruptcy on April 30. The Business Record and Brown's other publications will continue operations as usual, and a new owner is expected to be in place within 90 days.
According to Brown General Counsel Joel Dempsey, "Brown Media Holdings, Brown Publishing Co. and related subsidiaries have filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code ... and have jointly agreed to sell substantially all of their assets.
"Supported by the companies' management, a 'stalking horse' bidder is in place to acquire the companies' assets. As part of the transaction, a substantial portion of the pre-petition operating liabilities will be assumed by the purchaser."
A "stalking horse" bid is an initial bid made by an interested buyer, establishing a floor for the sale. If other potential buyers emerge, the bankrupt company's creditors will select the winning bid.
Dempsey said this morning that a motion to be filed with a bankruptcy judge on Tuesday will include the timing and other details of the bankruptcy process. He said it's too early to know whether bids for separate pieces of the company will be considered.
Brown Publishing owns 15 daily newspapers, 32 weekly newspapers, 11 business publications and 41 free newspapers, shoppers and niche publications. Most of its holdings are in Ohio, but the company's reach extends to nine other states as well.
Brown purchased Des Moines-based Business Publications Corp. in 2007.
According to Dempsey, "With the approval of secured lenders, the companies filed ... for court approval of various, customary First-Day Motions, including $2.5 million of debtor-in-possession financing, use of cash collateral, the maintenance of employee payroll and health benefits and the continuation of the companies' cash management systems, all to permit the companies to continue to operate in the normal course pending the sale.
"Since September 2007, the companies have paid down over $23 million of outstanding principal on their existing credit facility."
According to the bankruptcy filing, Brown owes $70.5 million to its principal lender, Philadelphia-based PNC Bank, and $24.3 million to Wilmington Trust Co. The filing places the current book value of the company at $94.8 million.
A large number of newspaper publishers filed for bankruptcy in 2009, and more filings have followed this year.
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