Facing Default, Publisher Lee Enterprises Sells ‘Junk’ to Foil Distressed Investors

Posted on by

Matt Wirz:

Newspaper chain Lee Enterprises Inc. is on the verge of saving itself from bankruptcy–and many of its debt holders are livid.
Lee, weighed down by about $1 billion of debt, has long been high on the list of potential bankruptcies. But thanks to the roaring market for debt of risky companies, Lee is preparing to sell junk bonds that would enable it to pay off its obligations and give it a new shot at survival.
But what is good news for the company has thwarted the plans of a flock of “vulture” investors–Monarch Alternative Capital, Alden Global Capital, Marblegate Asset Management and a unit of Goldman Sachs Group Inc.–which have been buying Lee’s loans. The group had been betting the company would default, and that they could turn their holdings into an ownership stake, giving them access to the company’s assets, which include St. Louis Post Dispatch and the Arizona Daily Star newspapers.
…..
Lee incurred much of its debt in 2005 when it paid top-dollar to buy Pulitzer Inc., a chain of 14 newspapers including the St. Louis Post-Dispatch. The combined company would have been a particularly valued prize because, unlike many of the other publishers that went bankrupt in recent years, the company generates over $100 million of free cash flow despite its debt load. The publisher’s focus–running small and midsize papers and keeping a rein on costs–has insulated it from the worst of the decline in subscriptions and advertising affecting newspapers in metropolitan markets.

Lee owns half of Capital Newspapers, publisher of the Wisconsin State Journal.

You Call This Global Leadership?

Posted on by

Suddent Debt:

The US government is about to be shut down in the next 24 hours over the federal budget impasse. Here are the only numbers you need:
Federal spending is approx. $3.7 trillion, the deficit this year alone is projected at $1.4 trillion – and the politicians are squabbling over spending cuts amounting to $33-40 billion; that’s 1% of spending and 2.9% of the deficit. You gotta be joking, right?

Related:

Reforming the Banks

Posted on by

Michael Pettis:

just got back from a very interesting but hectic week in New York and Washington, followed by two days at a conference in Hangzhou. During my meetings I noticed that much of the discussion, and many of the questions I was asked by both government officials and investors, focused on debt levels and reforms in the Chinese financial system. I have written a lot about rising debt in China and am glad that analysts and policymakers seem to be spending a lot more time thinking about balance sheet issues. Every case of rapid, investment-driven growth in the past century, as far as I can make out, has at some point reached a stage in which debt levels rose to unsustainable levels and precipitated either a debt crisis or a long grinding adjustment period.
The reason debt levels always seem to grow unsustainably, I suspect, is that in the initial stages of the growth model much if not all of the investment is economically viable as it pours into building necessary infrastructure whose profits and externalities exceed the cost of the investment. The result is real growth. At some point, however, the combination of subsidies, distorted incentives (in which investment benefits accrue to those making the investment while costs are shared broadly through the banking system), and very cheap financing costs leads inexorably to wasted investment and debt rising faster than asset values. This is when the debt burden begins to rise in an unsustainable way.

Tracking Inflation: The Billion Prices Project

Posted on by

The Billion Prices Project::

Data collection: our data are collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full array of products sold by these retailers. Our data include information on product descriptions, package sizes, brands, special characteristics (e.g. “organic”), and whether the item is on sale or price control.
Daily Online Price Index Computation: The daily online index is an average of individual price changes across multiple categories and retailers. The index uses a basket of goods that changes over time as products appear and disappear from a retailer’s webpage. It is updated on a daily basis and leveraged to estimate annual and monthly inflation. This index is not designed to forecast official inflation announcements, but to provide real-time information on major inflation trends.
Monthly Inflation: The monthly inflation rate is the percentage change between the average of the daily online price index of the last 30 days and the average of the previous month. For example, on the last day of September 2010, we compared the average of the daily index between September 1st and September 30th to the average of the daily index between August 1st and August 31st. On the last day of each month, the value of our monthly inflation is equivalent to the monthly statistic reported by official offices.

The Constitution, President Obama and Libya

Posted on by

Ben Smith @ Politico::

“He’s been more bold than any other president,” said Fein, who said Obama has failed to secure congressional approval for his military action in a much more brazen way than previous administrations.

“If he can wipe out the war powers authorization, why can’t he wipe out Congress’s authority to spend?” asked Fein. ” If we’re going to be a government of laws, and not descend into empire, this is Caesar crossing the Rubicon.”

Fein said a number of Congressional offices have expressed interest in his proposal.

“They actually need to defend constitutional prerogatives,” said Fein. “There’s definitely been interest on the Hill. There’s at least two dozen who have been open to the idea that this is a serious constitutional crisis.”

Lufthansa Flight Attendents Busted for Smuggling 63,000lbs of Euros into Germany

Posted on by

Matthew::

Six Lufthansa employees, including four flight attendants, have been arrested after sneaking in more than 63,000 pounds of out-of-circulation, €1 and €2 coins from China back to Germany over the last four years.

Euro coins have two color tones, gold and silver, and when the German Central Bank takes the coins out of circulation, the two colors (see picture to the left) are separated then sent to China to be melted down into scrap metal.

A wily group in China reassembled the coins rather melting them, then sent them back to Germany with four LH flight attendants serving as “mules.” Because FA’s don’t have baggage weight limits and can typically carry-on their bags and breeze through customs, they became the ideal method of transporting this discarded money. The FAs would then take the coins to the Bundesbank (only the central bank in Germany accepts damaged coins) and turn them in for bills. The bank typically does not count coin deposits under €1000 but will instead weigh the money bags without inspecting the coins. The scheme went off without a hitch for over four years.

Twitter’s Tax Break Lobbying

Posted on by

Verne Kopytoff::

Twitter is well on its way to getting a tax break in San Francisco after threatening to leave the city for the suburbs.

San Francisco’s Board of Supervisors on Tuesday voted 8 to 3 to preliminarily approve a tax break that could allow Twitter to avoid tens of millions of dollars in taxes. A second vote expected next week would make the legislation official.

As I recounted in an article Monday in the Times, Twitter had said it planned to move out of San Francisco, where it is based, because of the high cost of doing business.

Amazing that Twitter, of all people, get a tax break. much more on tax break lobbying, here.

On Medicare Reform

Posted on by

David Leonhardt::

Eugene Steuerle, a former Treasury official in both Democratic and Republican administrations, says simply, “We have a budget for a declining nation.”

Mr. Steuerle — along with his Urban Institute colleague Stephanie Rennane — has done some of the most careful work comparing Medicare taxes and benefits. They added up all the taxes people at different points on the income spectrum would pay over their working lives and then translated these amounts into a single sum, expressed in today’s dollars. Mr. Steuerle and Ms. Rennane likewise added up the value of Medicare benefits (net of premiums) that men and women could expect to receive.

Their results show that no cohort of Americans, with the possible exception of the very affluent, pays enough Medicare taxes and premiums to cover their costs. The gap is growing over time, too.