UPDATE 2-Journal Register investor offers $25 mln infusion
(Adds Moody's debt downgrade)
NEW YORK, May 14 (Reuters) - Battered U.S. newspaper Journal Register Co JRCO.PK may have found a savior to help it stave off default.
Ancora Capital is willing to invest at least $25 million to shore up the struggling newspaper publisher in return for a significant ownership stake, the company disclosed in a filing with U.S. securities regulators on Wednesday.
That would help the company avoid defaulting on its debt and risking bankruptcy.
Getting the money is contingent on Journal Register being able to arrange with its lenders a restructuring of its debt, said Richard Barone, chairman of the Cleveland-based investment firm.
"If the debt can be restructured in such a way that the projected cash flow can cover interest and principal payments, then Journal Register would be able to survive," Barone told Reuters in an interview.
Journal Register owns 22 daily papers in several states, including Ohio, Pennsylvania and Michigan. Its largest paper is the New Haven Register in Connecticut.
The company said last week it risks defaulting on its debt by July 23, barring better second-quarter performance or an amendment to its credit agreement.
Ancora, which Barone said owns slightly more than 5 percent of the company's shares, is interested in finding buyers for some of the company's papers. Like most U.S. newspapers, they have been hard hit by advertising declines brought on by a weak housing market and a global credit crisis, as well as a departure of print readers for the Internet.
Still, newspapers have cachet and value in their communities, Barone said.
"Local businesspeople would support or want to own a local newspaper, just like they would want to own a radio station or a sports franchise," he said.
"There needs to be a period of time in which all of the publications they own are analyzed and the ones that are least attractive, let's say, [we] begin looking into the local communities to see if there's local interest in purchasing those."
A Journal Register official did not return a telephone call seeking comment.
Journal Register shares were delisted from the New York Stock Exchange after its stock fell below the minimum listing requirements. The company said in April it hired Lazard Freres to review its options.
Later on Wednesday, Moody's Investors Service downgraded about $693 million of Journal Register's debt and said lenders would likely get less than full recovery of their money if the company is sold or liquidated. Continued...
