As part of a plan to refinance its nearly $1 billion in debt, Lee Enterprises will give lenders 13 percent (6.744 million shares) of its common stock.
The deal announced Sept. 8 would give Lee more time to repay its long-term debt, largely the result of acquiring the St. Louis Post-Dispatch in 2005.
Lenders who will get the ownership share and a boost in interest on the refinanced debt include Goldman Sachs Lending Partners LLC, Franklin Templeton/Mutual Quest Fund and Monarch Master Funding Ltd.
Lee's news release said the refinancing arrangement had the support of 90 percent of its lenders.
"If the company can achieve lender support of 95 percent, and assuming successful completion of the Pulitzer Notes refinancing, the company expects to implement the transactions out of court," the Lee news release reported. "Otherwise, the company will seek to implement the transactions through a joint prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code."
Under the refinancing plan, Lee would get:
- A first lien loan of $690 million with an interest rate of LIBOR* plus 6.25 percent (with a LIBOR floor of 1.25 percent) -- 7.5 percent at current rates. Matures December 2015.
- A revolving credit loan of $40 million at LIBOR (with a floor of 1.25 percent) plus 5 percent -- 6.25 percent at current rates. Matures December 2015.
- A second lien loan of $175 million with an interest rate of 15 percent and maturing in April 2017.
As a condition of the agreement, Lee also will have to refinance $143 million still owed on so-call "Pulitzer Notes" incurred in the purchase of the St. Louis newspaper. The Pulitzer Notes mature in April 2012.
Lee stock jumped nearly 30 cents a share the week following the refinancing announcement to 90 cents a share, and was most recently trading at 82 cents a share.
Lee Enterprises operates 49 daily newspapers, including the Quad City Times and Muscatine Journal, and is headquartered in Davenport.
*LIBOR -- London Interbank Offered Rate -- is the rate at which banks borrow unsecured funds from other banks and is often used as a reference to reflect fluctuating interest rates over time.
