The future of the St. Augustine Record remains uncertain as the newspaper shuts down its local printing facility and its publisher, Morris Publishing Group, LLC, continues to accumulate debt – failing to pay the $9,746,730 interest payment due to its lenders February 1, 2009 and an additional $9,746,730 interest payment that was due August 3, 2009.
JPMorgan Chase Bank, N.A., has been serving as administrative agent for a number of banks who reportedly are on-the-hook for over $226,000,000 of outstanding principal amount, or, about 80% of Morris Publishing’s $278,478,000 of 7% Senior Subordinated Notes due 2013.
In addition to JPMorgan Chase Bank, N.A., the lenders holding the Morris debt include The Bank of New York, SunTrust Bank, Wachovia Bank, N.A., Bank of America, N.A., General Electric Capital Corporation, Allied Irish Banks, P.L.C., RBS Citizens, N.A., Comerica Bank, US Bank, National Association, First Tennessee Bank, National Association, Webster Bank, National Association, Keybank National Association, Sumitomo Mitsui Banking Corporation, and Mizuho Corporate Bank, Ltd.
Morris Publishing, Morris Communications Company, LLC (“Morris Communications”) including its subsidiary guarantors; MPG Newspaper Holding, LLC (“MPG Holding”), the parent of Morris Publishing, Shivers Trading & Operating Company, the parent of MPG Holding, and Morris Communications Holding Company, LLC, the parent of Morris Communications had been granted eleven default waivers as of August 21, 2009.
Under the Credit Agreement originally made December 14, 2005 and amended several times, the lenders have the option to accelerate the maturity of the obligations under the Credit Agreement, if Waiver No. 11 is terminated, upon the occurrence of any other default under the Indenture, or if Morris Publishing files for bankruptcy protection or breaches its covenants under the Forbearance Agreement.
In a published earnings statement dated May 14th, Morris said “several factors relating to the Company’s outstanding debt raise significant uncertainty about its liquidity and ability to continue as a going concern.”
The statement went on to say “the Company’s debt far exceeds the current value of its assets”.
According to the Newspaper Association of America, there are about 49.1 million daily newspaper readers today — that’s about the same number as in 1966 when the country’s population was 196 million. But, today, the population of America is 305 million.
The Pew Research Center for the People and the Press found the readership of print newspapers had dropped from 34 percent to 25 percent between 2006 and 2008.
Writing in The Globe and Mail (June 13, 2009) Ryerson University journalism teacher Suanne Kelman said there is no single cause for the troubled times hitting papers: “There’s the stampeding flight of advertising, the public’s loss of trust, the decline in literacy, blogging, a reluctance to pay for news, a market fragmented into shards…Take your pick.”
At the same time, classified advertising revenue has been siphoned off by the advent of such online services as craigslist and other local news portals.
Speculation continues as to how much longer the newspaper publisher’s creditors will be willing to patiently wait for their overdue money – or, how much longer it will be before Morris is forced to sell The Record or the Florida Times Union to avoid further consequences from its staggering debt.
Photo credit: Historic City News photographer Kerry McGuire