Strib Publisher Chris Harte responds to NY Post bankruptcy allegation
Star Tribune Publisher denies bankruptcy allegations, acknowledges hiring Blackstone Group.
As soon as I saw the news that the NY Post was reporting that the Strib was near bankruptcy, I emailed Editor Nancy Barnes and Publisher Chris Harte to get comment. Harte responded with a surprising swiftness, sending me an email within an hour, with instructions to a staffer to give me the official statement (which I got within a matter of minutes). Considering I got the email from Harte at 6:08 p.m. on a beautiful spring Sunday, I'm guessing that this is something he's in a hurry to knock down.
I reproduce the statement here in its entirety:
From Chris Harte, Star Tribune Publisher:
On Sunday the New York Post reported that the Star Tribune has failed to meet its debt obligations and alleged that we are “on the brink of bankruptcy.”
The facts are that the Star Tribune currently has sufficient liquidity and is current on all its debt payment obligations.
While it is true that we face declining ad revenue—as do most major metropolitan newspapers—we have been working aggressively to get our cost structure in line with current revenue shortfalls. This is the most challenging time our industry has ever faced, so we are in constant and constructive communication with our lenders about the state of our business.
We recently hired the Blackstone Group to help us evaluate alternatives to our current capital structure, but that hardly merits a conclusion that we are near bankruptcy. In fact, Blackstone has substantial expertise in balance sheet restructurings through means other than statutory proceedings like bankruptcy.
It’s important to emphasize that none of the current discussions we are having about our financial structure has any effect on our current operations, which are generating positive cash flow. We are focused on maintaining the high quality of our journalism and community service as we have for the past 140 years.
The New York Post is reporting that the Strib is on the verge of bankruptcy, sourcing unnamed insiders:
May 4, 2008 -- The Minneapolis Star Tribune, reeling under a heavy debt load and plummeting advertising sales, is on the brink of bankruptcy, The Post has learned.
One of the nation's top dailies, "The Strib," as it is known to readers in the Twin Cities, recently hired the Wall Street powerhouse Blackstone Group to restructure its balance sheet after failing to meet its debt obligations, according to people familiar with the company.
The broadsheet is unlikely to shutter its doors, but its creditors, including the banking giant Credit Suisse Group, figure to eventually end up controlling the paper. Down the road, the creditor group could then sell it after dramatically cutting costs.
The private-equity firm Avista Capital Partners, run by former Credit Suisse deal maker Tom Dean, purchased the Star Tribune from the McClatchy Co. in 2006 for $530 million. The New York firm, which put up $100 million of its own money and borrowed the rest, stands to lose its entire investment, sources said.
The Strib has finally posted an article acknowledging the tumultuous day's events:
Star Tribune's owner hires restructuring adviser to look at finances By MATT McKINNEY, Star Tribune
Last update: May 4, 2008 - 7:23 PM
Faced with sliding advertising revenue amid a continuing slowdown of the newspaper industry, Avista Capital Partners, the owners of the Star Tribune, have hired a restructuring adviser to examine the company's finances.
The hiring of Blackstone Group, a New York private equity firm and financial adviser, was not accompanied by a bankruptcy filing, nor has the Star Tribune missed any payments to its creditors, said Star Tribune publisher and chairman Christopher Harte.
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