The Star Tribune Co. is the latest private equity-backed company to become controlled by lenders. It reemerged from bankruptcy protection this week, after having reduced its debt to $100 million from about $480 million.
“This is an important day for the Star Tribune — the first day of a new beginning,” board chairman Michael Sweeney wrote in a letter to readers. “Today we emerge from bankruptcy with new owners and a new lease on our future.”
The company, which owns the Minneapolis Star Tribune, the 15th largest daily newspaper in the US, collapsed into bankruptcy in January, unable to service its debt amid industry-wide declines in newspaper sales and advertising revenue.
Avista Capital Partners had purchased the company from newspaper conglomerate McClatchy Company in 2007, contributing roughly $105 million in equity as part of the $530 million takeover.
That equity has been wiped out and the Star Tribune is now controlled by its lenders, which include Angelo Gordon, Credit Suisse, GE Capital, CIT Group and Wayzata Investment Partners.
Sweeney is the managing partner of Minneapolis-based private equity firm Goldner Hawn Johnson & Morrison. He was named board chairman at the end of August.
At the same time, former Wall Street Journal publisher Gordon Crovitz was named to the Star Tribune's board, as were William Farley, founder of private investment firm Livingston Capital, and Michael Reed, chief executive of community newspaper company Gatehouse Media.
Sweeney said the company has reemerged from bankruptcy in a stronger financial position, committed to delivering quality journalism and ready to confront the challenges facing the newspaper industry.