Sept. 4 (Bloomberg) -- Fortress Investment Group LLC plans to create a newspaper and website company, New Media, through the bankruptcy of its GateHouse Media Inc. and the recently purchased assets of Newcastle Investment Corp.
Newcastle has made “two investments in high-yielding local media companies that will be combined and spun into a new company,” Fortress Co-Chairman Wesley Edens said during a conference call today. As part of the plan, GateHouse will file a prepackaged bankruptcy next week, he said. Such prepackaged reorganizations already have creditor support.
Newcastle, managed by New York-based Fortress, said today it bought Dow Jones Local Media Group from News Corp. for $87 million. The operations, including 33 local publications, will be run by GateHouse, Newcastle said. More than 80 percent of readers rely on a local newspaper and the industry’s distress has created a buying opportunity, Newcastle said.
GateHouse’s 78 daily newspapers serve 10 million people in 21 states, according to the company’s website. It also owns 91 advertising-only publications, 235 weekly newspapers, 350 locally focused websites and six yellow-page directories.
Newcastle, which owns 52 percent of GateHouse’s $1.2 billion in debt, said it entered an agreement to restructure the company by converting the debt into equity in a new company. Other creditors will have the option of converting their debt to equity or cash at a price of 40 percent of par, Newcastle said in a statement.
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