Gannett, Gatehouse talking merger

At the end of last year Gannett with about 80 papers had 504,000 digital subscribers. Gatehouse with about 160 generally smaller papers had 145,000. So the combined companies, with about 240 papers, have abot 2,800 digital subscribers per paper. I do not think this will end well.

 

Page Six says Gatehouse is going to borrow 1.8 billion dollars to refinance both companies debt and pay about 700 million dollars to Gannett shareholders. The interest rate is reported to be 11.5%.

https://nypost.com/2019/08/05/gatehouse-media-agrees-to-pay-1-38b-for-gannett/

 

Not sure if I should be more annoyed at Gatehouse for their continued bullshit with this move, or, with the fund that somehow thinks this is a good idea that won't result with them in bankruptcy court five years from now with two dozen other debtors. Like if the best rate you can get is 11.5 percent, doesn't that suggest this is a bad idea?

 

Yeah, it does. But remember Fortress exercises management control over Gatehouse even though they own about one percent of the equity. I don't completely understand the contract but Fortress is going to receive four million shares of stock and additional millions in management fees to terminate their management contract. My guess is that Fortress will walk away with clsoe to another 100 million dollars as their severance package.

So basically Fortress cashes out and they don't care what the hell happens down the road.

 

Ya know, Lancey, I love your insight but damn it you depress me

 

Sam Zell got an 8.5 interest rate to buy Tribune in 2007. I thought that was a stupid high rate at the time.

 

In other words, for everyone at a Gannett/Gatehouse paper - RUN.

Run. Run. Run out that door and don't look back.

 

It’s like GateHouse just put Gannett on its credit card. Seriously, I have a card with lower rates.

 

Isn’t 11.5 percent essentially junk-level borrowing?

 

I have a meeting tomorrow. Not officially a job interview, but it's the first step. (Long story, it's for a non-profit org)

 

Indeed.