LAKE OF THE OZARKS, Mo. — The parent company of Lake Media has filed for Chapter 11 bankruptcy protection. GateHouse Media (GHS) released the news last week, saying the company was restructuring approximately $1.2 billion of debt scheduled to come due next August.
"With the challenges facing our industry and the impending maturity of our secured debt next year we needed to be proactive in exploring options to restructure our debt, recapitalize, and position ourselves for future growth," GateHouse CEO Michael Reed said. "We don't believe our customers, vendors, or employees will notice any change on our day-to-day operations as a result of the bankruptcy."
In its bankruptcy petition, GateHouse disclosed assets of $433.7 million and debts of $1.3 billion. Reed said GateHouse has sufficient cash to operate during the Chapter 11 process.
GateHouse Media, a company created in 2006 by Fortress Investment Group after the hedge fund purchased Liberty Group Publishing, has owned Lake Media for eight years, and owns approximately 300 other publications and several hundred websites across the country. Lake Media publishes the Lake Sun Leader daily newspaper, LakeNewsOnline.com, Lake Lifestyles Magazine, WestSide Star, Lake Area News Focus, Vacation News, and a host of free publications.
Reed has been at the helm of GateHouse Media since Fortress Investment Group took the company public in October 2006 at an IPO price of $20 per share. The company hit a low of $0.06 two years later and was delisted by the New York Stock Exchange. At close Friday, GateHouse traded on the OTC for $0.35. The shares belonging to current shareholders will be canceled under the restructuring plan.
GateHouse's creditors -- including Fortress affiliate Newcastle Investment Corp., which carries 52 percent of 1.2 billion in debt -- have approved a restructuring proposal that passes control of GateHouse publications to a new company named New Media Investment Group. Under the plan, current GateHouse shareholders would be offered warrants to buy 5% of New Media under the restructuring agreement.
Newcastle has announced it intends to take this new media company public sometime next year with a focus on growth through investment in online media and digital marketing businesses.
