Star Tribune holds off paying lenders
By Leah McBride Mensching, Wednesday 2 July 2008 at 17:16 :: Newspaper Data :: #1865 :: rss
Star Tribune Co. has not made regular quarterly payments to some debt holders, and a quarterly interest payment due Monday on US$96 million in second-tier debt was not made, which puts the company in default on that debt, the Minneapolis Star Tribune reported.
However, other debt was paid, with the company's chief executive stating in an interview with the Star Tribune that a lending group holding senior debt of almost $400 million was paid Monday, according to the newspaper's Monday report.
Although the company has enough money to pay “second-lien” debt holders, it has chosen to forego some payments while it is working to create a debt restructuring plan with senior debt holders, as well as a plan to reduce expenses and increase revenue, Chris Harte, the newspaper's chief executive, told the Star Tribune.
In May, the newspaper hired The Blackstone Group to aid in restructuring debt amid slumping revenue, which has dropped to about $300 million in 2007, down from about $400 million in 2000, the newspaper reported.
“If we can restructure this debt, we still have a very viable (business),” Harte told the Star Tribune, adding that the newspaper has been unable to cut operating costs quickly enough to match revenue declines. Employment at the company, however, is down from about 2,300 in 2000 to about 1,500 currently, due to buyouts, layoffs and attrition.
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