Freedom Communications Inc., parent company of the Clovis News Journal, Portales News-Tribune and Quay County Sun, should emerge from bankruptcy by the end of March, according to the company’s top executives.
Interim Chief Executive Burl Osborne and Chief Financial Officer Mark McEachen said that while some change in the company’s newspapers, magazines and TV stations is inevitable, “things will not be turned upside down … the (new) board is not interested in changing something that works.”
Osborne added that Freedom’s various publications and news outlets will continue to cover and address the needs of their local communities.
Freedom filed for bankruptcy reorganization Sept. 1. It owns 33 daily newspapers, 70 other-format publications and eight television stations.
A reorganization plan has been submitted to the bankruptcy court in Delaware. Creditors have until Monday to vote on the plan, which is set for a confirmation hearing March 9.
Under the plan, Freedom’s secured debt would be reduced from $770 million to $325 million. Unsecured creditors would split an initial $32.2 million but would be able to pursue a lawsuit against the company board and insurance companies in an effort to recoup up to $25 million more.
The Hoiles family, which has owned the flagship Orange County (Calif.) Register newspaper since 1935, would have no ownership. The lenders have already named a new board of directors that will take over when the company emerges from bankruptcy. According to the court filings, Osborne will be the post-bankruptcy CEO. He has been interim chief executive since last summer.
After the court approves the plan, some technical work must be completed including the transfer of FCC licenses for the TV stations, Osborne said.
Already, Freedom Communications is attracting attention from investors that are buying debt from existing secured creditors, Osborne said. He acknowledged that one is Angelo Gordon & Co., a New York private equity firm that has also bought the debt of other media companies in bankruptcy, including the Tribune Co., owner of the Los Angeles Times, Philadelphia Inquirer and Minneapolis Star Tribune.
The names of investors and remaining lenders that will own the post-bankruptcy company will be filed with the court.
Osborne said that last year Freedom Communication’s debt was selling for as little as 20 cents on the dollar, but recent interest has driving the price up to 70 cents.
“The interest level in this company and prospects for the future have become apparent to strategic and financial investors so there has been a large runup in the value of our debt,” Osborne said.
McEachen added, “Our investors have the ability to put their money in any investment. They have chosen to invest in our properties and our associates. We have to be considered one of the media companies that will flourish in the future.”
Freedom Communications’ reorganization calls for the company to more than double pretax earnings to $98 million within four years. Osborne said that improvement will be achieved by:
• Continued efficiencies in management and operations. One example already implemented is joint newspaper delivery with the Los Angeles Times
• Revenue growth, especially from online activity, such as an existing partnership with Yahoo
• Improved coordination among divisions within the company
• Joint efforts with other media companies