Financial Worries Deepen at Philadelphia Media Holdings
According to a report released today by Standard & Poor’s, the owner of the Philadelphia Inquirer and Daily News has received a forbearance agreement from its creditors that will run through September 10th. Philadelphia Media Holdings, the investor group put together by publisher Brian P. Tierney to acquire the papers and philly.com in 2006, will face a serious financial penalty — interest on its debt will climb a full percentage point — in exchange for being allowed to skip payments during that period. PMH has also offered to surrender $15 million from its revolving line of credit, reducing it to $35 million.
The change in the line of credit is moot, yet speaks volumes. The company is already prohibited from accessing its credit line after violating a term of their loan covenant several months ago. S&P is also reporting that PMH is seeking a $3.2 million letter of credit — a short-term, stopgap funding measure.
Perhaps most tellingly, the market is shying away from a media ship that looks increasingly like the Titanic. PMH’s loan was trading at 70 cents a dollar in early June, but is now trading in the mid 40s — another signal that the market believes PMH is in serious financial difficulty. “The good news is their lenders are continuing to work with them,” says Chris Donnelly, vice president of Standard & Poor’s LCD, a unit that tracks the leveraged finance market. “Without an agreement that gives them access to their revolving credit line, they probably have a very challenging cash position. But this buys them some time to negotiate a permanent solution.”
A phone call to PMH and an e-mail to Tierney seeking comment were not immediately returned. — Steve Volk
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