NEW INFO: Owner Of Several NC Newspapers Files Bankruptcy

Freedom Communications Inc., the owner of dozens of newspapers in Eastern Carolina and across the country, filed for Chapter 11 bankruptcy protection.

In Eastern Carolina, Freedom owns the Jones Post in Trenton, the Havelock News, the Daily News in Jacksonville, the Free Press in Kinston, the New Bern Sun Journal and the Topsail Advertiser in Surf City.

Tuesday, Freedom and its subsidiaries filed "voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code, along with a plan-support agreement executed by a steering committee of their lenders. According to the agreement, a majority of the lenders will support a pre-negotiated plan of reorganization that incorporates the terms of the restructuring."

Officials at Freedom Communications say the company's daily and weekly newspapers, TV stations and websites "will continue normal operations. Readers, viewers and advertisers should see no difference in the day-to-day operations of these businesses."

"This announcement is positive news for the Company and all of our associates, who have been making extraordinary efforts to transform our business, as well as for our customers and the communities that depend on us for critical information," said Freedom CEO Burl Osborne. "Reaching this agreement with our lenders provides us with an orderly process to re-align our balance sheet with the realities of today`s media environment."

A press release from Freedom Communications stated that, as of the filing date, it has sufficient cash to fund daily operations, including post petition payments to vendors and partners and to meet customer and employee obligations through the duration of the restructuring.

"We are grateful for the confidence our lenders have continued to demonstrate in Freedom," Mr. Osborne said. "We will work to implement this restructuring agreement through the Chapter 11 process as expeditiously as possible and emerge with a solid balance sheet to face both challenges and opportunities in the future."

Freedom Communications owns approximately 90 daily and weekly publications, including approximately 30 daily newspapers, plus ancillary magazines and other specialty publications. The company has eight television stations. The papers and stations operate websites as well.



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The Wall Street Journal reported on its Web site Sunday that the privately held company has reached agreements with its lenders to restructure its debts. The report cited unnamed people familiar with the situation.

In Eastern Carolina, Freedom owns the Jones Post in Trenton, the Havelock News, the Daily News in Jacksonville, the Free Press in Kinston, the New Bern Sun Journal and the Topsail Advertiser in Surf City.

Robert Emmers, a spokesman for Freedom, declined to comment Sunday night on the possibility of a bankruptcy filing, but he told The Associated Press that the company is "continuing to work with its lenders to resolve (its) balance sheet issues."

The Journal reported that Freedom's lenders were expected to take control of the company while it operates under bankruptcy protection.

The lenders — including J.P. Morgan Chase & Co., SunTrust Banks and Union Bank of California — hold about $770 million in debt.

Freedom was founded in the 1930s by R.C. Hoiles and is still majority owned by the Hoiles family. Besides its flagship Orange County Register, the company owns 32 daily and 77 weekly newspapers, plus several television stations.

Family members representing about one half of the Hoiles clan sold their stake in the company more than five years ago when private
equity firms Blackstone Group and Providence Equity Partners acquired a 40 percent share for about $460 million. The stake of the remaining family members likely would be wiped out by a bankruptcy filing, the Journal said.

Freedom's Chapter 11 filing would be the latest in a long line of bankruptcy cases involving media companies that have struggled with a sharp drop in advertising revenue brought on by the growth of the Internet and compounded by a long recession.

"Freedom has been affected by the same thing that all the media companies have been affected by: the decline of advertising, which has been accelerated by the downturn in the economy," Emmers said. "Freedom has been working really hard to realign its balance sheet with the reality of the media market today."

The company announced last month that it would reduce pay across the board by 5 percent, and the Register has announced cost-cutting measures this year including layoffs, unpaid furloughs and salary freezes.

(Copyright 2009 by The Associated Press and WITN-TV. All Rights Reserved.)


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