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Media conglomerate files bankruptcy

Individuals in the media in Florida watched as a publishing company, GateHouse Media Inc., petitioned the U.S Bankruptcy Court in Delaware for bankruptcy protection on Sept. 27. This happened as creditors were seeking a restructuring plan that would give control of the company to an investment group. The bankruptcy petition lists assets of close to $434 million and debts of $1.3 billion. The company asserted that most of the lenders who voted on the plan supported it.

The company CEO reported that they are not facing operational difficulties but elaborated that they are dealing with a decrease in profits similar to struggles that other media outlets are experiencing. He added that the decision to file bankruptcy was a strategic move as $1.2 billion in loans were scheduled to mature in 2014. They wanted to restructure their debt and move the company forward.

The bankruptcy would give the lenders of the $1.2 billion all new stock as the company restructures. The main lender was Newcastle Investment Corp.; they hold slightly more than half of the debt. The deal would also give Newcastle the first option of purchasing new shares for 40 cents on the dollar. Newcastle will also include Dow Jones Local Media Group, an $87 million acquisition, in the new company. Newcastle plans to develop their business and branch off into another company, New Media, which will be publicly traded by the beginning of 2014. New Media will focus on the expansion of media assets. Although current stocks will be canceled, shareholders would have the option to purchase five percent of New Media stock.

In some cases, bankruptcy can be a viable business option as a company works to restructure their debt. A bankruptcy attorney might be able to advise business clients regarding bankruptcy protection.

Source: WSJ, "GateHouse Files for Chapter 11 Bankruptcy Protection", Marie Beaudette, September 27, 2013

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