Fortress to Create ‘New Media’ With Newcastle Assets
Fortress Investment Group LLC (FIG) plans to create a newspaper and website company, New Media, through the bankruptcy of its GateHouse Media Inc. (GHSE) and the recently purchased assets of Newcastle Investment Corp. (NCT)
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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