Freedom Communications, parent company of Freedom New Mexico, filed a petition for Chapter 11 bankruptcy Tuesday but said operations aren’t expected to change.
The filing was done, “along with a plan-support agreement executed by a steering committee of (Freedom’s) lenders,” according to a company press release.
“(The company) has sufficient cash to fund daily operations including post-petition payments to vendors and partners and to meet customer and employee obligations through the duration of the restructuring.”
The move — expected for months — was made in an effort to restructure the company’s $770 million debt.
Under the reorganization, Freedom’s debt will be cut to $325 million.
Freedom, founded by the Hoiles family of Santa Ana, Calif., in 1935, owns 33 dailies, 70 weeklies and other publications, and eight television stations.
During an afternoon conference call with Freedom associates nationwide, interim CEO Burl Osborne said he considers the move “good news, not bad news.”
“It’s bittersweet, no doubt, but nevertheless it is not a time for mourning,” Osborne said.
“What I have seen from the family is while they are grieving for their loss they have turned (their attention to) the associates ... they always wanted to act in what was in the best interest of the institution and what was in the best interests of the associates and what was in the best interest of the communities (they serve).”
Freedom Communications acquired the Clovis News Journal on Dec. 2, 1935, from private owner Mack Stanton.
The Portales News-Tribune and Quay County Sun were purchased from Southern Newspapers by Freedom in 1997.
In Chapter 11 bankruptcy, the company's operations continue while details of the restructuring are worked out under the oversight of federal bankruptcy court.
The process is expected to take four to six months, possibly longer due to FCC issues, and the courts will have ultimate discretion over the terms of the restructuring, Osborne said.
Osborne said 26 banks and one other institution will control 98 percent of the company’s shares. Current shareholders will hold the remaining 2 percent.
The new owners will select a board of directors and CEO to manage the company.
While Osborne said the new owners could rename Freedom, it is not expected they would change the libertarian premise of the company or other aspects of operations.
He said it is unlikely the banks involved would want long-term ownership.
“It is not inconceivable that you would see (a) sale to another media company (or) some type of merger,” he said.
Shareholders will have the option to purchase up to 10 percent of the company in the future, he said.
Pensions, retirements and other employee benefits are not expected to be impacted and Osborne said at this point there is no expectation of further pay cuts, furloughs or layoffs.
Earlier this year, Freedom employees were placed on five-day, unpaid furloughs and later received 5-percent pay cuts.
With tough economic times and downward pressure from declining advertising and print revenues, Osborne said the company needs to continue finding ways to work more efficiently.
“We need to be lean and mean to the greatest possible sense until we can get through this,” he said.