Freedom Communications announced that a federal bankruptcy court in Delaware has confirmed its reorganization. The newspaper and TV station group owner says it expects to emerge from Chapter 11 by the end of March. Freedom had filed the pre-packaged Chapter 11 petition last September.
According to Freedom, the reorganization plan was supported by the Steering Committee of the Company’s secured lenders and the Official Committee of Unsecured Creditors, and approved by an overwhelming majority of its voting creditors. It eliminates approximately $450 million of debt from Freedom’s balance sheet, “giving the company the flexibility and financial strength it needs to best serve all of its stakeholders.”
Under the plan, Freedom’s secured debt would be reduced from $770 million to $325 million. Unsecured creditors would split an initial $32.2 million, but they will be able to pursue a lawsuit against the company board and insurance companies in an effort to recoup up to $25 million more.
Upon emergence from Chapter 11, the company will receive a $25 million revolving credit facility from General Electric Capital Corporation, as agent. Freedom said the credit facility will ensure that the company has adequate back-up liquidity upon emergence to meet its working capital needs.
“Navigating through Chapter 11 as rapidly as we have is a remarkable achievement, testifying to the hard work of all involved. We have worked closely with our major constituents to implement a plan that treats our stakeholders fairly while deleveraging the Company and positioning it for future success and meeting the challenges of the new media environment,” said CEO Burl Osborne.
While Freedom’s TV, print and online operations will continue to operate much as they have in the past, what has changed dramatically is the company’s ownership. The modified reorganization plan leaves members of the founding Hoiles family and their private equity partners, Blackstone Group and Providence Equity Partners, with no stake at all, as a result of changes to satisfy a group of unsecured creditors who had been seeking to file a competing reorg plan. The original plan would have allowed the Hoiles/Blackstone/Providence group to maintain a small stake in the new company.
Freedom owns eight TV stations, approximately 30 daily newspapers (including the flagship Orange County Register) and about 60 non-daily publications.