Lee Enterprises granted court approval of lender backstop commitments

By Caroline Salls

Pittsburgh, Jan. 11 - Lee Enterprises, Inc. received court approval to enter into backstop commitment letters with several lenders, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Lee entered into amended and restated backstop commitment letters last month with initial backstop lenders Goldman Sachs Lending Partners LLC, Franklin Templeton/Mutual Quest Fund and Monarch Master Funding Ltd.

The amended letters will allow the company to meet the conditions of a support agreement between St. Louis Post-Dispatch LLC, Pulitzer Inc., Star Publishing Co., other Lee affiliates and a group of institutional holders under St. Louis Post-Dispatch's existing note agreement, as well as to make the principal payments on the notes.

The company also entered into new backstop commitment letters in December with Mudrick Distressed Opportunity Fund Global, LP and Blackwell Partners, LLC.

The support agreement is tied to the agreement to extend Lee's Pulitzer notes debt maturity to December 2015 and will enable implementation of Lee's overall refinancing plan announced in September.

Lee announced in September that its credit facility would be amended and extended beyond its current maturity of April 2012 in a structure of first-lien and second-lien debt.

The first-lien debt consists of a term loan of $689.5 million, as well as a new $40 million revolving credit facility, both of which mature in December 2015.

The second-lien debt consists of a $175 million term loan maturing in April 2017.

Lenders under the second-lien term loan will share in the issuance of 6.74 million shares of Lee's common stock, which will be equal to 13% of the outstanding shares as of the closing date.

A condition to the refinancing of the credit facility announced in September was that Lee would refinance the remaining $138 million of its Pulitzer notes debt with a separate loan.

Lee was unable to find acceptable terms and sought an amendment of the existing agreement with the noteholders, a Dec. 12 press release stated.

Under the new agreement, the Pulitzer notes will carry an interest rate of 10.55%, increasing 0.75% in January 2013 and each year thereafter. After adjustment for principal payments and non-cash fees to be paid to noteholders, the amended Pulitzer notes will have a balance of $126.4 million at the closing of the transaction, the release stated.

Lee, a Davenport, Iowa-based print and digital provider of local news, information and advertising, filed for bankruptcy on Dec. 12. The Chapter 11 case number is 11-13918.

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