Journal Register files for Chapter 11
The Journal Register Co. quietly filed Friday for Chapter 11 bankruptcy protection, becoming the third publisher in as many months to succumb to an overwhelming debt load.
Journal Register, whose stock closed Friday at a third of a cent per share, had shut dozens of its non-daily newspapers since the first of the year in an effort to raise enough cash to avoid defaulting on $646.3 million in debt.
The business achieved a 14.3% operating profit on sales of $428 million in the last 12 months, but the cash flow was inadequate to manage a debt load in excess of 10 times its profits.
After missing scheduled debt payments last year, JRCO persuaded its lenders to hold off on declaring a default. The so-called forbearance agreement lapsed a few weeks ago and documents filed along with the Chapter 11 case indicate the Journal Register seeks to be reorganized as a privately held company owned by the lenders.
The Journal Register filing was not announced by the company on Friday and its website did not respond for most of the day Saturday until about 7 p.m. Eastern time, when the company issued this press release about the filing.
The initial confirmation of the bankrupcty was obtained at the website commonly used by bankruptcy attorneys to manage cases. The online filings show the company had $736.6 million in liabilities and $596.2 million in assets, as of the end of November, 2008.
A company that grew through aggressive acquisitions, aggressive financings and even more aggressive management of operating costs, Journal Register traded as high as $21.84 per share in 2004 before being banished to the Pink Sheets last year when its shares fell below the $1 minimum required for listing on the New York Stock Exchange. The strategic missteps that led to the downfall of the company were described in this post.
JRCO owns the New Haven (CT) Register and about two dozen dailies and several hundreed non-daily publications. It has shut at least three dozen of the 321 non-daily properties it claimed in its 2007 annual report.
In seeking protection from its creditors in a federal court in Manhattan on Friday, JRCO joined in the Tribune Co. and the Minneapolis Star Tribune in Chapter 11. Tribune filed in December just days short of the first anniversary of its acquisition by Sam Zell and the Strib filed last month.