Lee Enterprises to refinance second lien debt to 2022
February 03 2014 - 9:10AM
DAVENPORT, Iowa (February 3, 2014) -- Lee
Enterprises, Incorporated (NYSE: LEE), a major provider of local
news, information and advertising in 50 markets, has reached
agreement with a group of lenders to refinance its $175 million of
second lien debt with a new $200 million facility, extending
maturities from April 2017 to December 2022.
The refinancing will reduce the interest rate of
Lee's second lien debt to 12% from 15% and is expected to close
within 60 days.
Mary Junck, chairman and chief executive officer,
said: "This agreement both lowers our interest cost and gives
us an even longer runway to continue reducing debt aggressively. We
are now setting our sights on refinancing our first lien debt and
expect another successful outcome."
Carl Schmidt, Lee vice president, chief financial
officer and treasurer, said lenders in the second lien refinancing
will receive warrants to purchase a total of 6 million shares of
Lee common stock, which will represent, after full issuance,
approximately 10.1% of shares outstanding. The exercise price per
share will be market-based, at the lower of $4.19 or the
volume-weighted average trading price for the 10 days immediately
prior to closing, minimizing dilution to current stockholders. He
said the warrants, when exercised, are expected to provide an
additional source of funds for debt reduction or other corporate
purposes.
Schmidt said the amount of the second lien debt
can be reduced without penalty within 90 days after closing by up
to $75 million, potentially reducing the outstanding second lien
debt to as low as $125 million if a refinancing of first lien debt
provides sufficient funding for any such prepayment.
The current second lien debt totals $175 million.
The current first lien debt totals $600 million and matures in
December 2015. Lee's current long-term debt also includes a balance
of $53 million of Pulitzer Notes issued to a subsidiary of
Berkshire Hathaway, maturing in April 2017.
Schmidt said that under the new second lien
agreement, excess cash flows of Lee's Pulitzer subsidiary may be
used, first, to reduce the outstanding amount of the Pulitzer
Notes, second, to pay obligations under the new second lien
agreement, and third, for a three year period, to pay amounts under
the first lien agreement. Voluntary prepayments under the new
second lien agreement otherwise will be subject to call premiums
that step down to zero over a five-year period. Collateral
under the new agreement will be substantially identical to the
existing second lien facility.
JPMorgan Securities LLC and Deutsche Bank
Securities Inc. are acting as joint lead arrangers and joint
bookrunners for the new second lien agreement.
Lee Enterprises is a leading provider of local
news and information, and a major platform for advertising, in its
markets, with 46 daily newspapers and a joint interest in four
others, rapidly growing digital products and nearly 300 specialty
publications in 22 states. Lee's newspapers have circulation of 1.1
million daily and 1.5 million Sunday, reaching nearly four million
readers in print alone. Lee's websites and mobile and tablet
products attracted 25.6 million unique visitors in December 2013.
Lee's markets include St. Louis, MO; Lincoln, NE; Madison, WI;
Davenport, IA; Billings, MT; Bloomington, IL; and Tucson, AZ. Lee
Common Stock is traded on the New York Stock Exchange under the
symbol LEE. For more information about Lee, please visit
lee.net.
FORWARD-LOOKING STATEMENTS -- The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This news release contains
information that may be deemed forward-looking that is based
largely on our current expectations, and is subject to certain
risks, trends and uncertainties that could cause actual results to
differ materially from those anticipated. Among such risks, trends
and other uncertainties, which in some instances are beyond our
control, are the possibility that the warrants will not be
exercised, that the second lien financing described herein will not
be consummated, or if consummated, the terms will differ
substantially from those described herein, our ability to generate
cash flows and maintain liquidity sufficient to service our debt,
comply with or obtain amendments or waivers of the financial
covenants contained in our credit facilities, if necessary, and to
refinance our debt as it comes due. Other risks and uncertainties
include the impact and duration of continuing adverse conditions in
certain aspects of the economy affecting our business, changes in
advertising demand, potential changes in newsprint and other
commodity prices, energy costs, interest rates, labor costs,
legislative and regulatory rulings, difficulties in achieving
planned expense reductions, maintaining employee and customer
relationships, increased capital costs, maintaining our listing
status on the NYSE, competition and other risks detailed from time
to time in our publicly filed documents. Any statements that are
not statements of historical fact (including statements containing
the words "may", "will", "would", "could", "believe", "expect",
"anticipate", "intend", "plan", "project", "consider" and similar
expressions) generally should be considered forward-looking
statements. Readers are cautioned not to place undue reliance on
such forward-looking statements, which are made as of the date of
this release. We do not undertake to publicly update or revise our
forward-looking statements.
Contact: dan.hayes@lee.net, (563) 383-2100
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Lee Enterprises Inc. via Globenewswire
HUG#1758544
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