Journal Register Co., a newspaper publisher in bankruptcy for a second time, won’t get a ruling today on whether it can sell its assets to an affiliate of its current owner in exchange for $114 million in debt and at least $6 million in cash, a judge said.
U.S. Bankruptcy Judge Stuart Bernstein said today at a hearing in New York that he will review in more detail an objection by a division of the Communications Workers of America regarding how future grievances may be handled by the proposed buyer, 21st CMH Acquisition Corp.
“No one is giving them a free pass in the future,” Bernstein said of the buyer. He asked lawyers for all the parties how the deal will be affected by the March 31 expiration of the union’s collective bargaining agreement and said he will rule later on the issue.
Journal Register seeks to move a step closer to winding down and resolving the Chapter 11 case it started in September. The company, which publishes the New Haven Register in Connecticut and other regional titles, delivers local news and other information to about 1,000 communities in 10 states and reaches 21 million people a month, according to its website.
Journal Register chose CMH as the buyer because it was the company’s only “stalking-horse” bidder. A February auction was canceled due to a lack of other potential buyers and objections by most other union groups were resolved before the hearing, the company said in court papers.
CMH is an affiliate of funds managed by Alden Global Capital Ltd., which acquired two Journal Register loans totaling $152 million in the previous bankruptcy in 2009. The debt exchange is called a credit bid, in which buyers offer the value of the secured debt they are owed in exchange for assets.
The company’s sale agreement includes severance and paid time off for employees who lose their jobs as a result of the deal, the assumption of liabilities totaling $22.8 million and other costs, according to an amended sale agreement filed with the court on March 15. A total value of the deal wasn’t cited.
The company won court approval last year to borrow as much as $25 million from Wells Fargo & Co. to fund operations while in court protection.
Journal Register, based in Yardley, Pennsylvania, listed assets of $235 million and debt of $268.6 million in its Chapter 11 papers last year. The debt included about $13.2 million on a revolving credit owing to Wells Fargo, according to court papers filed at the time.
The company’s newspapers include the Delaware County Times and the Trentonian near Philadelphia, the Oakland Press in Michigan, the Daily Freeman in Kingston, New York, the Register Citizen in Connecticut and the News-Herald outside of Cleveland.
The publisher previously sought court protection in February 2009, at the time listing debt of as much as $1 billion. Journal Register exited bankruptcy about six months later under the terms of a prenegotiated reorganization plan.
The case is In Re Journal Register Co., 12-13774, U.S. Bankruptcy Court, Southern District of New York (Manhattan).