Lenders Take Control Of Ashland Daily Press [Updated 3]

Lenders took control of American Consolidated Media – owner of the Ashland Daily Press – on Wednesday after the Texas-based company broke the terms of a three-year $133.7 million loan deal.

The lenders acquired 90 percent ownership of the company, according to an Australian banking and investment group that owned American Consolidated Media until Wednesday. The group, Southern Cross Media Group Limited, maintains a 10 percent non-voting equity stake, though lenders acquire "100% control" of American Consolidated Media, a Southern Cross news release states.

Asked on Thursday about the new ownership arrangement, Daily Press Publisher Todd Keute declined comment and referred inquiries to American Consolidated Media's headquarters in Irving, Tex.

Attempts to contact Randy Cope, president and CEO of American Consolidated Media, were unsuccessful Thursday afternoon.

On Friday, The Daily Press reported that American Consolidated Media "completed a restructuring." The report states that the "restructuring provides a solid foundation for the future of its publications and employees as local economies recover from the recession." 

In addition to relinquishing its majority ownership, Southern Cross is released from all claims attached to American Consolidated Media's debt, according to the news release, which doesn't identify the lenders.

However, a Reuters report stated that the lenders in 2009 included the Australia and New Zealand Banking Group, New York-based CIT Group, GE Commercial Finance, Macquarie Bank of Australia, National Australia Bank, and the Royal Bank of Canada.

According to Reuters, the lenders worked out a “debt-for-equity swap agreement” last year with American Consolidated Media when the company was having trouble meeting the terms of its loans. Those loans were slated to mature on June 29, according to an October 2009 news release issued by American Consolidated Media's then-owner Macquarie Media Group.

In January 2007, Macquarie Media Group purchased American Consolidated Media, valued at about $81 million, because it met the company's “key investment criteria,” according to a 2007 news release. “ACM is a very attractive investment for MMG as it meets our key investment criteria. It provides essential local news and information to the communities in which it operates …,” Managing Director Alex Harvey states.

By 2009 the acquisition soured; the Macquarie Media Group informed its investors it had no plan to inject cash into American Consolidated Media or provide any other kind of financial support, according to an investor bulletin.

In March, investors voted to rename the Macquarie Media Group as “Southern Cross Media Group” to “enhance security holder value, optimise the capital and corporate structure of Southern Cross Media Group, and reposition Australia's leading regional radio and television operator,” according to the Macquarie Group Limited website.

An October 2009 Wall Street Journal news report explained that the Macquarie Group buys assets with heavy debt and then turns these assets into funds from which management fees could be collected. The article also stated that the global financial crisis complicated the timing of Macquarie's purchase of American Consolidated Media.

Calls made to Macquarie's Southern Cross Media Group in Australia were unsuccessful Wednesday night.

In June 2007, American Consolidated Media bought the Superior Publishing Corporation. Along with The Daily Press, Superior Publishing Corporation owns several other newspapers in Minnesota and Wisconsin.

Attempts to reach Charles Johnson, president of Superior Publishing, were unsuccessful Thursday afternoon.

In October 2009, The Daily Press stopped publishing a print edition on Tuesdays, replacing it with an electronic version available on its website.

At the time, Johnson said the company's goal was to “leverage the value of the Internet,” according to an article appearing in Business North, a Duluth-based publication. “These changes are part of overall strategy to enhance the newspapers’ multi-media presence and leverage the value of the Internet while maintaining full news coverage for the community,” Johnson stated.

In March, The Daily Press began charging readers to access online content, which sparked a wave of criticism on the Daily Press website.

“Are you trying to go bankrupt???” one reader wrote at the time. “No matter how bad your financial report is at the moment, if you go through with this, I cannot see the Ashland Daily Press surviving.”

According to Business North, Johnson described paying for content over the Internet as a future trend. “This industry as a whole is moving toward a paid content model,” he stated.