Heartland Publications, the owner of 23 daily newspapers and other publications in nine states, including South Carolina, filed for Chapter 11 bankruptcy protection Monday after agreeing with its major lender on a plan to cut the company's debt load by more than half.
The privately held company - which owns The Newberry Observer, The Easley Progress and the (Winnsboro) Herald Independent in South Carolina - is one of at least a dozen newspaper publishers forced into bankruptcy protection by the recession. The economic downturn dampened advertising sales in an industry that was already seeing readers and advertisers migrate to the Web.
In its filing in U.S. Bankruptcy Court in Wilmington, Del., Heartland reported assets of roughly $134 million and debts of $166 million.
Heartland spokeswoman Rivian Bell said the company's top lender, GE Capital, has agreed to reduce what it is owed to $70 million from roughly $111 million. In exchange, the financial-services arm of the industrial conglomerate General Electric Co. would get a 90 percent stake in the company.
Bell said that the remaining 10 percent ownership stake would be distributed to the company's unsecured creditors in return for canceling their debt - but only if they agree to the plan.
The largest unsecured lender is the hedge fund Silver Point Finance LLC, which is owed $44 million in unsecured debt. Silver Point did not immediately respond to a request for comment.
Heartland said that by reaching an agreement before filing, it hoped to emerge from bankruptcy protection by early spring. The company said the newspapers - in South Carolina, Georgia, Kentucky, North Carolina, Ohio, Oklahoma, Tennessee, Virginia and West Virginia - would continue operating as usual.