Monday, March 8, 2010

Bankruptcy update

A federal judge has approved a bankruptcy reorganization plan presented by Denver-based Affiliated Media, Inc., clearing the way for the newspaper owner to emerge from chapter 11 protection within the next two weeks.

The Hon. Kevin J. Carey of U.S. Bankruptcy Court for the District of Delaware confirmed the plan at a hearing Thursday. The plan reduces the firm's debt by about 81 percent, from approximately $930 million to approximately $165 million.

Affiliated Media is the nation's second-largest newspaper publisher by circulation and owner of 54 daily newspapers, including the Los Angeles Daily News and the Long Beach Press-Telegram. Formerly known as MediaNews Group, the firm changed it's name last year to Affiliated Media, Inc., according to lawyers from Affiliated.

The reorganization, which will retain the MediaNews Group leadership at the helm of Affiliated, was approved prior to the filing by more than 90 percent of the firm's debtors.

Dean Singleton told the Salt Lake Tribune on Thursday that the lenders, mainly a group of banks led by Bank of America, would play no role in managing Affiliated or its properties.

Under the approved reorganization plan, Affiliated's debtors will own about 88 percent firm, with the former-MediaNews Group leadership retaining the rest. Stipulations in the plan allow the MediaNews Group leadership, including Singleton, to eventually own up to 20 percent of the firm.

The newly created seven-member Board of Directors for Affiliated includes Singleton, Utah billionaire Jon Huntsman Sr., Jody Lodovic, president of MediaNews, and Howell Begle Jr., the firm's general counsel. Under the bankruptcy plan these four Class A seats were selected by the former MediaNews leadership.

Class B directors named to the board by the lenders include Joseph Euteneurer, chief financial officer of Qwest Communications International, and Michael Sileck, former chief operating officer of World Wrestling Entertainment. And additional seat on the board remains to be named by the lenders.

Singleton will get a base salary of $634,000 in addition to a $360,000 salary at Denver Post Corp., court papers show. He will receive 6 percent of the reorganized company’s stock, out of about 11 percent reserved for management, and warrants to buy 8 percent more. He is eligible for a performance bonus of as much as $500,000 a year.

Lodovic’s base salary will be about $1 million plus 3 percent of the reorganized company’s stock. He will be eligible for a yearly bonus of up to $500,000, according to court documents. He already has received $500,000 for achieving goals in the restructuring process and stands to receive $250,000 more as part of a deal to win confirmation by March 31 and execute the turnaround plan by April 14.

Top executives not including Singleton or Lodovic stand to receive bonuses totaling $1.6 million and will receive up to 2 percent of the reserved Affiliated stock.

According to lawyers for the Guild, the reorganization should have no impact on the National Labor Relations Board settlement over the illegal transfer of employees from the Press Telegram to the Daily Breeze.

No comments:

Post a Comment