GateHouse Media prepackaged plan of reorganization confirmed by court

By Caroline Salls

Pittsburgh, Nov. 6 - GateHouse Media, Inc.'s plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on Nov. 6.

The disclosure statement for the plan was also approved.

As previously reported, GateHouse entered into a plan of reorganization support agreement with the administrative agent and some lenders under its 2007 secured credit facility, including affiliates of GateHouse, which calls for a comprehensive restructuring of $1.2 billion of debt scheduled to be due in August 2014.

GateHouse's common stock will be canceled under the plan, and holders of secured debt will have the option of receiving a cash distribution equal to 40% of their claims or stock in New Media Investment Group Inc., a new holding company that will own GateHouse and Local Media Group.

The terms of the restructuring will include the following:

• Newcastle Investment Corp. or its designated affiliates will offer to purchase the outstanding debt in cash at 40% of par on the effective date of GateHouse's prepackaged plan;

• The holders of the outstanding debt will have the option of receiving the cash-out offer and/or common stock in a new holding company (New Media) that will own the reorganized GateHouse and Dow Jones Local Media Group, Inc. and any net cash proceeds of a potential new debt facility;

• Newcastle will contribute its interests in Local Media, which it acquired on Sept. 3, to New Media in exchange for common stock of New Media and, at its sole discretion, $50,000 in cash;

• On account of any purchases of outstanding debt, Newcastle will receive a share of New Media common stock and the net proceeds of the new debt facility; and

• GateHouse will use commercially reasonable efforts, in light of market conditions and other relevant factors, to raise an up to $150 million new debt facility for reorganized GateHouse on the same or better terms than those set in the restructuring support agreement. However, entry into a new debt facility will not be a condition to the effectiveness of the restructuring.

The plan also calls for up to $15 million in additional revolving commitments to be funded after the $150 million of financing;

• Pension, trade and all other unsecured claims of GateHouse will be unimpaired; and

• Equity interests in GateHouse, including warrants, rights and options to acquire equity interests, will be cancelled, and the holders of existing equity interests will receive 10-year warrants, collectively representing the right to acquire a total of 5% of the common stock of New Media, with the strike price for those warrants calculated based on a total equity value of New Media, before the contribution of Local Media, of $1.2 billion.

GateHouse, a Fairport, N.Y.-based publisher of print and online media, filed for bankruptcy on Sept. 27. Its Chapter 11 case number is 13-12503.

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