Journal Register Co. Files for Chapter 11, Expects Normal Operations to Continue
YARDLEY, PA—February 21, 2009—Journal Register Co. today announced that the company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement a pre-negotiated plan of reorganization (the “Plan”) with certain of its secured lenders designed to substantially reduce the company’s debt. The company intends to continue to operate as usual, and does not anticipate any business interruption during the restructuring. (Three commercial printing operations are among its holdings, the largest being Journal Register Offset with and 86,000 sq.ft. facility in Exton, PA that employs approximately 100 people.)
On February 19, 2009, the company entered into a Plan Support Agreement with JPMorgan Chase Bank, N.A. and 26 of the 37 lenders party to the company’s Amended and Restated Credit Agreement dated as of January 25, 2006 (as amended, the “Credit Agreement”), which hold approximately 77% of the aggregate principal amount of the indebtedness outstanding under the Credit Agreement. Each of the parties to the Plan Support Agreement have agreed to vote in favor of the Plan on terms and conditions set forth in the Term Sheet that is attached to the Plan Support Agreement.
The Term Sheet provides that each of the existing lenders under the Credit Agreement will receive a pro rata share of a $175 million Tranche A Term Loan Facility, a $100 million Tranche B Term Loan Facility and the common stock in the reorganized company, subject to dilution for future equity issuances. The Tranche B Term Loan has a payment-in-kind feature for its five-year term allowing the Company to opt to either make regular interest payments in cash or to pay the interest in kind. The Plan is expected to reduce the company’s total indebtedness by approximately $420 million. The company expects to continue to generate sufficient cash flow to fund its operations and, as a condition to implementation of the Plan, will obtain a $25 million revolving credit facility upon its exit from bankruptcy to further enhance its liquidity position. The Company’s existing equity holders would receive no distributions under the proposed plan.