* Journal Register Co seeks Chapter 11 bankruptcy
* Pre-negotiated reorganization plan with key creditors
* Newspaper publisher plans to restructure operations
By Emily Chasan and Robert MacMillan
NEW YORK, Feb 21 Journal Register Co JRCO.PK
sought Chapter 11 bankruptcy protection on Saturday, making it
the latest U.S. newspaper company to buckle under deteriorating
advertising revenue and debt that it cannot easily repay.
The company publishes 20 daily newspapers, including The
New Haven Register and The Trentonian. It joins the ranks of
the Minneapolis Star-Tribune, as well as Tribune Co, publisher
of the Chicago Tribune and Los Angeles Times, and highlights
the challenges U.S. newspapers face as advertisers flee their
print editions and more people get their news for free online.
For years, Journal Register has been among the smallest of
publicly traded U.S. newspaper publishers. Nevertheless, its
filing will increase scrutiny on other U.S. newspaper
publishers, including McClatchy Co (MNI.N) and Lee Enterprises
(LEE.N), which are trying to survive a severe ad downturn
without running afoul of their creditors.
Journal Register has already agreed with key creditors on a
pre-negotiated reorganization plan, and said it was planning to
restructure its operations.
A pre-negotiated bankruptcy allows companies to move more
quickly through the court process because they have agreed on
major issues with groups of creditors. The company plans to
solicit votes quickly from other creditors on its bankruptcy
reorganization plan, according to court papers.
The Yardley, Pennsylvania-based company said advertising
revenue had been driven lower by the housing downturn,
declining automotive sales, the retail sector slowdown, a slow
labor market that has hurt employment classifieds and a shift
to online media, according to court papers filed in the U.S.
Bankruptcy Court in Manhattan.
Journal Register's revenue declined by 2 percent in 2006,
8.5 percent in 2007 and was down 10 percent in the period from
January 2008 through November 2008.
The company has about $692 million of debt, it said in
court papers. It listed assets of about $596 million and
liabilities of about $737 million in court papers.
The company has about 3,465 employees and also owns 159
non-daily newspapers, it said in court papers. Under its
proposed reorganization plan, the company said it planned to
cancel its common stock.
Journal Register is the leftover company from the former
newspaper publishing empire owned by Ralph Ingersoll II in the
1980s. The company nearly went bankrupt late in that decade
after bingeing on junk bonds to finance acquisitions and then
being unable to pay its debt.
In the late 1980s, it embarked on an ill-fated effort to
start a rival daily paper to the St. Louis Post-Dispatch, which
was then owned by Pulitzer Inc and now is part of Lee. The
paper folded in less than a year.
The company had begun expanding earlier in the decade under
late Chief Executive Robert Jelenic, who kept a close watch
over expenses. According to some media reports, Jelenic
personally took mileage readings on company cars to make sure
his employees were not claiming too much money in expenses.
In 2004, the company spent $415 million to buy several
papers in Michigan, only to see unemployment rise and the local
economy fall apart. Many analysts in recent years said that
would prove to be a huge mistake.
Soon afterward, newspaper advertising revenue took a
nosedive, leaving more publishers dangerously close to not
being able to honor their debt terms. Journal Register
eventually was delisted and began restructuring proceedings,
including laying off employees and selling off papers.
The company has retained law firm Willkie, Farr & Gallagher
LLP as legal counsel, Lazard Freres & Co as investment banker
and Conway, Del Genio, Gries & Co as restructuring adviser, it
said in court papers.
Lazard also is advising Tribune Co, which filed for
bankruptcy after being unable to meet the terms of some $13
billion in debt it took on in a buyout led by real estate
magnate Sam Zell.
The case is In re: Journal Register Co., U.S. Bankruptcy
Court, Southern District of New York, No. 09-10769.
(Reporting by Emily Chasan and Robert MacMillan; Editing by