Associated Press, Published September 18 2009
Judge OKs Star Tribune to emerge from bankruptcyNEW YORK – A federal judge cleared the Star Tribune of Minneapolis on Thursday to emerge from bankruptcy protection by the end of the month under a reorganization that puts Minnesota’s largest newspaper in the hands of its main lenders.
Approval came despite efforts by lower-level creditors to require the newspaper to reveal the identity of its new publisher beforehand. A committee representing unsecured creditors, who will be all but wiped out in the reorganization, argued there was no way to assess the bankruptcy plan without knowing who will lead the newspaper.
The company said a steering committee put together by its new owners has a leading candidate in mind, but it declined to name that person, who still works for another company and has not yet signed a contract.
The Star Tribune will officially emerge from Chapter 11 by Sept. 28, ahead of its next financial reporting period.
U.S. Bankruptcy Judge Robert D. Drain’s approval allows the newspaper to reduce its debt by almost $400 million – to about
$100 million – as those claims are converted into ownership stakes for the creditor group led by Angelo, Gordon & Co.
First-tier lenders are getting new common stock plus secured notes worth 32 cents on the dollar while most unsecured lenders are getting a penny.
Besides Angelo, the company’s new owners include Wayzata Investment Partners, Credit Suisse Group, CIT Group Inc. and General Electric Co.’s GE Capital. They’ll get to choose new management, and a steering committee already has named four new board members, including former Wall Street Journal publisher L. Gordon Crovitz and Michael E. Reed, head of the Fairport, N.Y.-based chain of newspapers GateHouse Media Inc.
Star Tribune Publisher Chris Harte will step down and majority stockholder Avista Capital Partners will get nothing.
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