Posted on 05/09/2008 5:40:34 PM PDT by abb
Troubled Journal Register Co. warned late Friday in a regulatory filing that it probably will be in default of its loan covenant before the end of July.
Journal Register (OTC: JRCO.PK) said it was in compliance with the total leveraged financial covenant in the first quarter of the year ended March 30, but it is likely to be in default in the second quarter unless business picks up in some unexpected dramatic way.
"Unless there is significant improvement in the company's operating results during the second fiscal quarter or the company is successful in obtaining an additional amendment to the total leverage financial covenant, it is probable that the Company will be in violation of such covenant as of July 23, 2008," Journal Register said in a filing with the U.S. Securities and Exchange Commission. The date is when the total leverage calculation is made for the covenant.
Journal Register added it had "no assurance" of either improved operating results or another agreement from its lenders.
If Journal Register violates the covenant, its lenders have the right to demand immediate repayment of outstanding debt, which amounts to about $642 million.
At the end of the first quarter, Journal Register said, it had about $15.9 million cash on hand, and approximately $12.5 million available under its credit agreement. "There can be no assurances that this will remain sufficient to meet the Company's operating needs," it said in the filing.
Journal Register has hired Lazard Freres to "explore strategic options," including sale of all or part of the company.
The New Haven Register publisher has been burdened by debt it incurred to buy a cluster of suburban Detroit dailies, which have performed very poorly in Michigan's recessionary economy. Its stock has been delisted from the New York Stock Exchange and is traded in the over-the-counter market. It closed trading today at 30 cents, down 2 cents, or 7.14%. In May of 2005, it stock averaged a closing price of $16.21.
Journal Register also reported its first-quarter results Friday, saying it had a net loss of $72.2 million, or $1.84 a share, compared with a net profit of $29.1 million, or 74 cents a share, in the year-ago period.
The loss includes a charge of $1.78 a share for goodwill impairment and other write-downs for some of its papers.
Revenue fell 10.3 percent to $102.4 million in the quarter, on ad revenues that were off 12.1%, and offset a gain of 22.8% in online revenues. Journal Register said its online ad revenue now accounts for 6.4% of total revenue.
Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is E&P's editor-at-large.
ping
It seems as though you’re getting busier with these media death watch postings.
I got question how did they get into finanical troubles in first place yeah I know they blame internet for taking readers away
A labor of love...
Those numbers sound like liquidation time. I would prefer they shut the doors and stop printing the paper, but someone will pick up the papers at fire sale price.
I see that it is a nice $.30 stock. It is up from it low of $.16 within the last 12 months.
Journal Register has hired Lazard Freres to “explore strategic options,” including sale of all or part of the company.
If they are close to defaulting - just hiring (and paying the retainer of) Lazard Freres ought to do the trick of putting them out of their misery.
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