SCOTTSDALE, Ariz.— Lee Enterprises, Inc. repaid more than $60 million of debt in its fiscal year ended Sept. 30, and has since repaid another $15.3 million, reducing the balance to $930.6 million, below the level originally anticipated to be reached a year from now.
In remarks prepared for a presentation today at the Deutsche Bank 2012 Leveraged Finance Conference in Scottsdale, Mary Junck, Lee chairman and chief executive officer, and Carl Schmidt, vice president, chief financial officer and treasurer, said Lee expects to continue significantly reducing its leverage over the next few years.
They said that in the 12 months ended June 2012, Lee posted unlevered free cash flow of $170 million, and substantially all of that free cash flow will continue to be dedicated to servicing debt. Lower cash levels and selective asset sales have contributed to the acceleration in debt repayment.
In January 2012, Lee refinanced its former term loan and revolving debt into a structure of 1st and 2nd lien secured debt, along with a small undrawn revolver. Lee’s former Pulitzer Notes debt also was refinanced. Lee used a voluntary, prepackaged Chapter 11 process to bind a small minority of non-consenting lenders to the terms. The agreements extend the maturity of Lee’s borrowings to December 2015 and April 2017.
Among other comments:
• Buoyed by 10.1% growth in digital advertising revenue through June 2012, including 183% growth in mobile advertising, Lee’s ad sales performance has led the Newspaper Association of America industry average for 36 quarters in a row, since June 2003.
• Digital subscriptions have been introduced in three-dozen Lee markets so far, and the company remains on track to put them into place nearly everywhere else by the end of the calendar year. Although most of the rollout did not begin until recent months, digital subscription revenue totaled more than $1 million in fiscal 2012.
• The company is aggressively transforming its business model. Among other cost initiatives, more than one-third of Lee’s 51 daily newspapers are no longer printed locally, and several are being printed outside the company.
Lee Enterprises is a leading provider of local news and information, and a major platform for advertising, in its markets, with 47 daily newspapers and a joint interest in four others, rapidly growing digital products and nearly 300 specialty publications in 23 states. Lee’s markets include St. Louis, MO; Lincoln, NE; Madison, WI; Davenport; Billings, MT; Bloomington, IL; and Tucson, AZ.