Update, March 4: A judge today approved a restructuring plan that will allow Affiliated Media Inc., the parent company of MediaNews, to emerge from Chapter 11 bankruptcy.

The decision came despite a handful of last-minute objections from creditors.

The deal cuts the company’s debt from $930 million to $165 million, according to a press release issued on PR Newswire earlier this morning.

“We knew we had a good plan going in, and it had been approved by the lenders before it was filed,” CEO Dean Singleton said in the statement. “We are pleased that it won confirmation, and that our company is now well-positioned for the changing days ahead.”

A Bloomberg story provides more details.

Corporate officers have repeatedly said the debt restructuring will not affect daily newspaper operations or employees. Nonetheless, officials up to the highest level of The Newspaper Guild have been following the situation closely. We will continue to share details about the bankruptcy, and its aftermath, as they emerge.

As always, please don’t hesitate to bring any questions or concerns to your unit officers or shop stewards.

Update and bargaining bulletin, March 3: The Guild met with BANG’s management on Monday to talk about a number of issues that affect employees. Here is an update on where things stand:

Vacation
We discussed the company’s recent push for employees to use their vacation time, with an emphasis on taking those days before the end of June, and striving to use up each year’s accrual without banking time. We encourage workers to schedule their known vacations for many reasons, including easier bookkeeping and scheduling for the company, and making sure employees get the time off they want. However, we object to unit members being strongly pressured or forced to take vacations against their will.

Management maintains they can schedule vacation time for employees if they don’t do it themselves; the Guild disagrees. We’ve reminded the company of our contract provision allowing Guild-represented employees to accrue up to 1.75 times their yearly vacation accrual. The company agreed to this in previous contract negotiations after the Guild offered up a system that had employees scheduling all their yearly accrued vacation up front. Management turned down that proposal, and we take issue with an attempt to impose a condition the company previously rejected at the bargaining table.

For the time being, the company has met their vacation goals and the issue has died down. If it resurfaces, please contact your shop steward or other unit officer.

Holidays
The Guild has also asked management to clarify their position in writing on which days our workers will be eligible for the holiday premium pay this year, particularly for holidays that fall on weekends. We’d like to resolve this issue and communicate to employees about it well before the holidays to avoid confusion and disputes.

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Update, Feb. 2: The MediaNews bankruptcy marches ahead.

So far, proceedings in Delaware bankruptcy court seem to agree with the idea that Chapter 11 proceedings will be limited to MNG’s holding company, Affiliated Media Inc., and will not affect employees or union contracts.

David R. Hock of Cohen, Weiss and Simon represented The Newspaper Guild/ Communications Workers of America locals at the first day hearing on Jan. 26. It appears the pre-packaged bankruptcy will come to a swift conclusion, heading for confirmation without objection on March 4.

The U.S. Trustee is not inclined to convene a creditors’ committee. Local counsel of record will keep us updated on any court filings.

What the bankruptcy documents have shown so far:

• Hearst loses its $300-$400 million investment in MNG, but will get warrants that someday could be converted to stock.
• MediaNews President Jody Lodovic and Chairman and CEO Dean Singleton will continue to control the company post-bankruptcy.
• Under the reorganization plan, Singleton gets $634,000 in annual salary, an annual bonus of up to $500,000, and another $360,000 in salary from the Denver Post Corp. (Read AP’s story here).
• Lodovic gets $1 million in annual salary and an annual bonus of up to $500,000. He already got $500,000 in bonuses for leading the reorganization, and stands to get an extra $250,000 bonus when the bankruptcy is official.

Guild attorneys will continue to monitor the proceedings, including scouring all local agreements and pension plans for any mention of Affiliated Media.

The full text of the bankruptcy disclosure statement can be read here.

Consolidation with the Chronicle?

At this point, a main concern for all of us should be whether this bankruptcy will pave the way for even more consolidation — including a potential merger of the Bay Area News Group with the San Francisco Chronicle.

Singleton has been open about his desire to pursue more aggressive consolidation post-bankruptcy, telling the Washington Post that to imagine where such mergers might occur, “You can look at the map.”

As blogger Alan Mutter notes, “The long-running losses at the Chronicle, plus the MediaNews bankruptcy, may be sufficient to persuade regulators that an antitrust waiver is necessary to sustain journalism in Northern California.”  (Read the rest of his piece here.)
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Update, Jan. 19: Last week, we all received an email from Dean Singleton stating that MediaNews has, in consultation with its lenders, created a “prepackaged” bankruptcy filing for its holding company, Affiliated Media Inc. Filing could come as early as this week.

The official documents and the resulting hearings should provide more details of the arrangement, including the new ownership structure, and what, if any, compensation Hearst will receive for relinquishing its stake in the company. In the meantime, MediaNews has promised that neither workers nor daily operations of our newspapers will be affected by the bankruptcy, and we intend to hold them at their word.

What the Guild is doing on our end:

The Newspaper Guild has represented workers at five newspaper company bankruptcies, and in every case, employees continue to work and get paid, noted Carol Rothman, secretary-treasurer of TNG. “None of the guild properties have been affected any more drastically than anyone who is not in bankruptcy,” said Rothman.

The Guild has hired a law firm that specializes in bankruptcy to monitor workers’ interests as the filing proceeds, and representatives across the country are gathering relevant financial information.

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