Daily Star parent awards CEO $500k after bankruptcy exit
Lee Enterprises carrying $1 billion debt
The CEO of Lee Enterprises was awarded a $500,000 bonus after the troubled newspaper chain emerged from bankruptcy, the firm disclosed in a Tuesday regulatory filing.
Lee publishes the Arizona Daily Star, St. Louis Post-Dispatch, and dozens of other newspapers around the U.S.
Mary Junck, the chain's head, was paid the half-million dollar bonus by the company's board after the publisher of 50-some newspapers exited a pre-packaged bankruptcy earlier this year.
In a report filed with the Securities and Exchange Commission, Lee said its board of directors approved the bonus at the company's annual meeting last Wednesday. Lee also gave a $250,000 bonus to CFO Carl Schmidt.
A pre-packaged bankruptcy filing by Lee was approved by a federal judge in January.
Lee has been laboring under a $1 billion debt, much of which was to become due in April. The bankruptcy prepared by the chain pushed the due dates back to December 2015 and April 2017, while hiking interest rates from 5.1 to 9.2 percent and diluting the company's shares by 13 percent.
The company contended the Chapter 11 reorganization would give it time to right its finances.
The company reached terms with the majority of its debt holders last year, but had to go to court to force the terms on a minority of its lenders.
While the majority of Lee's debt holders agreed to push back the due date on the loans two years, about 3 percent of the company's lenders were non-consenting, Schmidt said in a release at the time.
Lee owns 48 newspapers around the country, with joint interest in four others, including the Star.
Last summer, the Star laid off 52 workers, including about 15 newsroom employees, in a cost-cutting move.
The company's partner in the Tucson paper, Gannett Inc., is the former publisher of the Tucson Citizen. While the press stopped rolling for that paper in 2009, Gannett and Lee remain partners in the South Park operation.
Lee took on the huge debt load to finance the 2005 acquisition of the Pulitzer newspaper chain for $1.46 billion, which brought it the Star and the St. Louis Post-Dispatch, among others. Lee publishes nearly 50 daily newspapers across the country.
Part of Lee's debt, $138 million known as the Pulitzer Notes, was inherited with that purchase, and is secured by the assets of the former Pulitzer chain, including the Star.
Lee was faced with having its stock delisted from the New York Stock Exchange after trading below $1 for months. That threat has abated somewhat since the bankruptcy filing, as Lee has traded at slightly more than the dollar threshold.
Tuesday, Lee dropped 6 cents to $1.25.
In 2004, Lee stock sold for $49.
Lee plans to charge readers to access the chain's websites, the company announced last week.
Lee is expected to introduce "digital subscriptions" within three months, and to build paywalls at most of the company's websites by the end of the year, Junck said at Lee's annual meeting.
It's not known if the Star will institute a paywall, or what it might cost. Company spokesman Dan Hayes said timing and pricing "will be determined market by market."
Lee rolled out paywalls at its six papers in Wyoming and Montana last year. Readers with a paid subscription to the print newspaper were charged about $20 per year to read stories online, while nonprint readers were charged $50-$75 per year.
The papers let readers access 15-20 stories before the paywall kicked in.
"We're excited about the opportunities we see for digital subscriptions," Junck told stockholders Wednesday.