Journal Register Company
CDG Role: Interim CEO/CRO and CFO
Background
- Journal Register Company is a multi-media corporation reaching 465,000 subscribers daily. The Company owns and operates 19 daily newspapers, 135 non-daily publications, and over 200 local news and information websites which contain videos, blogs and reader interaction. Operating in five geographic clusters, JRC is the leading provider of local sports, news and entertainment in many of the communities it serves.
- Following the acquisition of its Michigan Cluster in August 2004 for $415.0 million, JRC was left with a burdensome level of debt. The advertising revenues associated with the Michigan Cluster exhibited sustained declines following the acquisition.
- With both cyclical and permanent challenges facing the newspaper industry, JRC retained CDG to help undertake a significant operational turnaround and financial restructuring.
Issues
- Journal Register Company’s performance deteriorated in 2008. JRC faced declining circulation, declining advertising revenues, and margin pressure which rendered several of its publications unprofitable.
- Despite cost-cutting initiatives, as the overall industry continued to encounter a dramatic downturn in advertising revenue, the Company’s cash flows were no longer able to support its debt. Unable to comply with certain covenants under its credit agreement, JRC entered into a forbearance agreement with its lenders in July 2008.
- JRC contributed to four Multiemployer Pension Plans on behalf of its unionized workforce which were significantly underfunded, leading to concerns that future required contributions would increase significantly and become a drain on the Company’s future cash flows.
Value to Client
- CDG guided the Company through an operational restructuring which resulted in the closure of 162 publications, the downsizing of JRC’s labor force, and other cost-cutting initiatives. These efforts are projected to yield over $20.0 million in annual savings by 2010.
- With CDG’s leadership, JRC entered into a pre-negotiated chapter 11 bankruptcy proceeding, which provided for a substantial deleveraging of the Company’s balance sheet, as total debt was reduced from $695 million to $225 million.
- CDG assisted the Company in its efforts to withdraw from all but one of its Multiemployer Pension Plans in “critical status”. The associated withdrawal liabilities were settled along with other unsecured claims in the bankruptcy.
- In addition, CDG helped JRC Management develop a series of revenue enhancement initiatives which were implemented across all clusters.