The Minneapolis Star Tribune went through a private equity buyout two years ago and now that heavy debt load has sent the newspaper into Chapter 11 bankruptcy reorganization. The Star Tribune listed liabilities of $661.1 million and assets of $493.2 million.
"We intend to use the Chapter 11 process to make this great Twin Cities institution stronger, leaner and more efficient so that it is well positioned to benefit when economic conditions begin to improve," Publisher Chris Harte said in a statement.
Like Tribune Company which filed Chapter 11 last month, the Star Tribune went through a recent private equity buyout, taking on lots and lots of debt. Avista Capital Partners bought the newspaper from McClatchy Co. for $530 million less than two years ago. Since then, as is well known, the newspaper industry has gone into a revenue freefall.
The Star Tribune had already missed some interest payments, so seeking federal bankruptcy court protection from creditors was hardly a surprise. According to an article in the newspaper itself, the Star Tribune had EBITDA of about $31 million in 2008, a sharp drop from $115 million just four years earlier. That was 2004, when revenues peaked at $400 million, dropping to under $300 million in 2007, with no tally available yet for 2008.