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Lee Enterprises reorganizes

Lee Enterprises, which owns the Missoulian and the Ravalli Republic along with 46 other newspapers around the country, announced what it called "welcome news" last week: It plans on filing for Chapter 11 bankruptcy.

The company is hoping to head off looming balloon payments due on its roughly $1 billion in debt.

Under the "pre-packaged" bankruptcy deal, Lee shareholders will retain 87 percent of their equity.

"There will be no impact on employees, customers, vendors, contractors, contracts, company operations or corporate governance," Lee CEO Mary Junck maintained in a prepared statement.

In exchange for revamping loan terms, debt holders Goldman Sachs, Franklin Templeton and Monarch Master Funding will receive 6.7 million shares of Lee stock, or a 13-percent stake in the company, the country's fourth largest newspaper publisher.

Lee will pay a higher interest rate on its loans. It would also get some much-needed breathing room from its debt, postponing balloon payments until 2015 and 2017. "The things that we were most worried about fell into place for us," says Missoulian Publisher Jim McGowan.

University of Montana journalism professor Lee Banville says Lee, like the rest of the newspaper industry, is "far from out of the woods." And that may not bode well for news consumers in the one-newspaper towns across Montana and Wyoming that the company serves.

"If Lee really does have long-term trouble," Banville says, "the question becomes, how are these communities going to get any news service? Who's going to tell you what's going on in your community, in your schools and your local government? It isn't going to be The New York Times. And it isn't going to be bloggers."

McGowan says the Missoulian and Ravalli Republic are adapting to the evolving landscape. They rolled out a pay-wall last summer to increase revenue, and they're also working to diversify their products across digital mediums.

"We've had to find new strategies," McGowan says. "We're trying to be cutting-edge."

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