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Journal Register Company Files for Chapter 11

Monday, February 23, 2009

Press release from the issuing company

Yardley, PA -- Journal Register Company (the “Company”) today announced that the Company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement a pre-negotiated plan of reorganization (the “Plan”) with certain of its secured lenders designed to substantially reduce the Company’s debt.  The Company intends to continue to operate as usual, and does not anticipate any business interruption during the restructuring.

On February 19, 2009, the Company entered into a Plan Support Agreement with JPMorgan Chase Bank, N.A. and 26 of the 37 lenders party to the Company’s Amended and Restated Credit Agreement dated as of January 25, 2006 (as amended, the “Credit Agreement”), which hold approximately 77% of the aggregate principal amount of the indebtedness outstanding under the Credit Agreement. Each of the parties to the Plan Support Agreement have agreed to vote in favor of the Plan on terms and conditions set forth in the Term Sheet that is attached to the Plan Support Agreement. 

The Term Sheet provides that each of the existing lenders under the Credit Agreement will receive a pro rata share of a $175 million Tranche A Term Loan Facility, a $100 million Tranche B Term Loan Facility and the common stock in the reorganized company, subject to dilution for future equity issuances.  The Tranche B Term Loan has a payment-in-kind feature for its five-year term allowing the Company to opt to either make regular interest payments in cash or to pay the interest in kind. The Plan is expected to reduce the Company’s total indebtedness by approximately $420 million. The Company expects to continue to generate sufficient cash flow to fund its operations and, as a condition to implementation of the Plan, will obtain a $25 million revolving credit facility upon its exit from bankruptcy to further enhance its liquidity position. The Company’s existing equity holders would receive no distributions under the proposed plan.

The Company’s Chairman and Chief Executive Officer James W. Hall said, “Journal Register Company has taken numerous steps to reduce its debt and strengthen its balance sheet through the divestiture of unprofitable newspapers, headcount reductions and various other means.  However, due to the numerous challenges facing the newspaper industry and the overall economic downturn, our board of directors has decided, after careful consideration of all available alternatives, that a Chapter 11 filing was a necessary and best course of action for Journal Register Company.  We intend to emerge from the Chapter 11 process stronger, leaner and more financially viable in the current environment.  We are also pleased to have the support of our lenders in restructuring our debt obligations.  Our business will continue its normal operations and we will publish content as usual throughout this process.”

The Company has filed a number of customary first day motions asking the Court for permission to, among other things, continue to pay employee wages and salaries and to provide employee benefits without interruption.  The Company expects to pay its vendors and service providers on normal terms for post-petition goods and services provided in the ordinary course of business. 

The Company filed its voluntary Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York.  Additional information about the Company’s restructuring is available at the Company’s website at www.journalregister.com.  For access to Court documents and other general information, please visit http://chapter11.epiqsystems.com/journalregister. 




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