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Without New Financing, ‘Inquirer Will No Longer Be Published’
By JOHN P. CONNOLLY, The Bulletin
Philadelphia Newspapers, the company that publishes the Philadelphia Inquirer, admitted in court filings last week that if it does not get a proposed loan, it would have to cease publication.
"Absent the proposed DIP facility and the use of the cash collateral, the debtors likely will be unable to pay their ordinary business expenses, including employee wages," said the filing. "In that event, all operations will cease -- employees will be terminated, the Philadelphia Inquirer will no longer be published, and all assets on which the prepetition senior lenders assert a lien will be liquidated."
The filing did not give a date by which the company needed the loan.
The case, which began when Philadelphia Newspapers filed for bankruptcy on February 22, initially was presided over by Judge Jean K. FitzSimon. Judge FitzSimon was removed from the case due to medical reasons last week, and was replaced with Judge Stephen Raslavich, the Chief Judge of the U.S. Bankruptcy Court of the Eastern District of Pennsylvania.
Following the change, the hearings on a plan for the company's Debtor In Possession (DIP) financing were moved to Aug. 11 at 2 p.m. The rescheduling filing carried a notice that all objections and responses to the reschedule were to be filed before the close of business on Friday.
Senior creditor Citizens Bank had filed a request that the court enforce subpoenas served on Republic First Bank to make Republic First submit the contents of refinancing negotiations with Philadelphia Newspapers. Philadelphia Newspapers filed a revised refinancing proposal last week, outlining its plans for a $15 million loan from Republic First, and asking permission to pay $450,000 in fees incurred by Republic First's due diligence.
Before the company filed for bankruptcy, Citizens Bank had offered a $20 million loan to help the struggling newspaper company. Instead of finalizing the paperwork for that loan, the company chose instead to file for bankruptcy protection and seek a $20 million DIP from a group called Callowhill Partners. Citizens Bank criticized that DIP as coming from inside equity-holder Bruce Toll and its stipulation that current management be protected from reorganization.
The company's latest projections for cash usage show $5 million in infusions from the new loan to keep the company operating through September 11 and into the autumn. The company also said it expects an increase in advertising revenue ahead of the holiday season.
Editor & Publisher reported on its website that this Sunday's edition of the New York Times is preparing an in-depth report on the bankruptcy.
John P. Connolly can be reached at jconnolly@thebulletin.us
"Absent the proposed DIP facility and the use of the cash collateral, the debtors likely will be unable to pay their ordinary business expenses, including employee wages," said the filing. "In that event, all operations will cease -- employees will be terminated, the Philadelphia Inquirer will no longer be published, and all assets on which the prepetition senior lenders assert a lien will be liquidated."
The filing did not give a date by which the company needed the loan.
The case, which began when Philadelphia Newspapers filed for bankruptcy on February 22, initially was presided over by Judge Jean K. FitzSimon. Judge FitzSimon was removed from the case due to medical reasons last week, and was replaced with Judge Stephen Raslavich, the Chief Judge of the U.S. Bankruptcy Court of the Eastern District of Pennsylvania.
Following the change, the hearings on a plan for the company's Debtor In Possession (DIP) financing were moved to Aug. 11 at 2 p.m. The rescheduling filing carried a notice that all objections and responses to the reschedule were to be filed before the close of business on Friday.
Senior creditor Citizens Bank had filed a request that the court enforce subpoenas served on Republic First Bank to make Republic First submit the contents of refinancing negotiations with Philadelphia Newspapers. Philadelphia Newspapers filed a revised refinancing proposal last week, outlining its plans for a $15 million loan from Republic First, and asking permission to pay $450,000 in fees incurred by Republic First's due diligence.
Before the company filed for bankruptcy, Citizens Bank had offered a $20 million loan to help the struggling newspaper company. Instead of finalizing the paperwork for that loan, the company chose instead to file for bankruptcy protection and seek a $20 million DIP from a group called Callowhill Partners. Citizens Bank criticized that DIP as coming from inside equity-holder Bruce Toll and its stipulation that current management be protected from reorganization.
The company's latest projections for cash usage show $5 million in infusions from the new loan to keep the company operating through September 11 and into the autumn. The company also said it expects an increase in advertising revenue ahead of the holiday season.
Editor & Publisher reported on its website that this Sunday's edition of the New York Times is preparing an in-depth report on the bankruptcy.
John P. Connolly can be reached at jconnolly@thebulletin.us
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