GateHouse CEO to employees: Bankruptcy is not because we are doing anything wrong

GateHouse Media CEO Michael Reed, who has received millions in bonuses over the past few years has his company accumulated $1.2 billiion in debt, told his employees, in a message issued this morning, that the bankruptcy does not reflect any problems with the way he has been running things. The message is printed below:

Dear Fellow GateHouse Employees:

This morning, GateHouse Media filed for Chapter 11 relief in the U.S. Bankruptcy Court in Delaware. The purpose of the filing is to implement a “prepackaged” Plan of Reorganization that has the overwhelming support of our lenders. The Plan proposes a “balance-sheet restructuring,” by which GateHouse will emerge from bankruptcy with much less debt on its balance sheet, but with its business operations completely intact. We don’t believe you will notice any change in day-to-day operations.

The bankruptcy filing is not a reflection of any operational problems – we have complied with and are current with all our obligations. Rather, it was a strategic decision to facilitate the restructuring of our bank debt that will come due in August 2014. The restructuring remains on track, and we expect to complete it in as soon as 45 to 60 days. In the meantime, and throughout the process, we expect there will be no change in our business and no negative impact on our employees, customers, or vendors. In fact, our prepackaged plan provides for full payment of our obligations to employees, customers, and vendors. Essentially, from an operational standpoint, it’s business as usual.

When we emerge from bankruptcy, we will be under common ownership with Local Media Group, a company with a strong community media presence and performance that operates eight daily community newspapers and thirteen weeklies. Joining with Local Media Group will be an important step in growing our business and will contribute to our future success as the pre-eminent source for locally focused content, covering and serving our subscribers, advertisers and customers through print, online and other digital products, including mobile applications.

Most importantly, we want to thank you for your support of GateHouse Media, and specifically, for your dedication to our local publications and the communities we serve. We look forward to our next phase of growth and success.

Sincerely,
Michael E. Reed
Director and Chief Executive Officer