Buyers in wings for Western's smaller papers: Bulletin fate uncertain

            As Western Communications prepares to shrink while liquidating assets through bankruptcy including real estate and small newspapers in Oregon and California the future is uncertain for the company’s 117-year-old flagship Bend Bulletin and its 87,000 square foot headquarters facility.

            The Bulletin reported in its June 22 edition that the company has received an offer of $1.15 million for the Sonora (CA) Union Democrat weekly and office building and $240,000 for a Redmond building that formerly housed the Redmond Spokesman.

            The combined offers totaling $1.39 million follow earlier reported offers of $775,00 for The Observer in LaGrande and the Baker City Herald, and $350,000 for the Curry Coastal Pilot in Brookings and the Del Norte Triplicate in Cresent City, CA.

            Any offers must be approved through the company’s Chapter 11 federal bankruptcy proceedings. A hearing is scheduled for June 27 for the earlier offers and July 29 for the more recent ones. Other potential buyers for the Union Democrat can submit competing offers by July 11 but must exceed the original offer by $50,000.

            All the offers to date total $2,515,000, a small step in reducing the approximately $30 million debt carried by the company, much of that to its largest secured creditor, Sandton Master Fund Credit Solutions III LP, a fund of New York based Sandton Capital.

            The largest single debt is a note with a face value of nearly $19 million on the Bend headquarters facility, built in the early 2000s. Sandton acquired the debt from Bank of America after Western emerged from an earlier Chapter 11 bankruptcy filing in 2012. 
            Investor groups such as Sandton typically pick up troubled debt at deep discounts but the price it paid BofA is not recorded in county records

            As the largest secured creditor, Sandton would have first position claims on any funds generated by Western’s asset sales, including real estate, printing equipment and newspaper operations.

            The prospective buyer of the Union Democrat is Rhode Island Suburban Newspapers, RISN, which the broker representing Western said in an August 2018 news release owns media properties throughout Canada and the United States.

            Other online sources show that in 2007 RISN purchased the Rhode Island newspapers then owned by the Journal Register Corp, which also owned the New Haven (CT) Register before acquisition by another company.

            EO Media has offered to buy the LaGrande and Baker City papers, while Country Media wants to purchase the Del Norte Triplicate and Curry Coastal Pilot. EO Media owns the East Oregonian in Pendleton and the Hermiston Herald, as well at the Capital Press in Salem, and currently prints the LaGrande and Baker City papers for Western. Country Media has small weeklies on the Oregon Coast, in Montana and North Dakota.

            In its bankruptcy filing Western has said it anticipates selling newspaper operations in a wide price range from $5 to $10 million. The company has listed the headquaraters property for sale at $18 million and has also offered to lease approximately 5,000 to 20,000 square feet of the building.

            The building is well-located along SW Chandler Avenue, named for the late, respected Robert Chandler whose daughter is currently Western’s chairman and pubisher. Some speculation has arisen whether the building would be appropriate for expansion of the new nearby OSU-Cascades campus along the street to the north.

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Chapter 11 update: Western and Bend Bulletin to lease part of headquarters building

            As its Chapter 11 bankruptcy case proceeds, Western Communication and its flagship Bend Bulletin newspaper, are attempting to find a tenant to share space in the company’s 87,000 square foot high-end editorial and production building.

            The move follows earlier company announcements that all of Western’s newspaper operations were for sale and that the paper was taking steps to reduce newsprint and other costs through redesign of The Bulletin.

(previous post)

Bend Bulletin could be sold: Insiders have provided capital for years

            Already this year the company had reduced staff and required some employees to work reduced weeks, and had delayed paychecks in 2018, as noted in a Bulletin article in April.

            Bend’s Compass Commercial brokerage has listed space on the building’s second floor ranging from 5,499 to 20,539 square feet at a rate of $1.75 per square foot monthly, or $21 yearly. 

            The space offers “stunning views...several private offices and open work areas” according to listing details. The leased space would be, “independent and secure from first floor with separate entrance if required." Western would retain the lower floor space for its editorial, administrative, pre-press and printing operations.

            The lease availability follows by a few weeks the announcement that long-time company president and publisher John Costa would retire, with chairman and publisher Elizabeth McCool taking over those reponsibilities. Current Bulletin editor Erik Lukens was named chief editorial officer of the parent company. 

            With declining circulation and revenue leading to major staff reductions the massive headquarters building has been a burden on the struggling newspaper group, which includes four other publications in Oregon and two in California.                                                

           

            The company also entered Chapter 11 in 2011 after a dispute with Bank of America over the building loan payments. It emerged the following year but has never gained a solid financal footing, as revealed in the current bankruptcy documents.

            The Bulletin and Western’s problems are not unique to the newspaper industry, but some observers have said the company was overly ambitious in 2000 in construction of the large headquarters facility at 1777 SW Chandler Avenue, near the new OSU-Cascades 4-year campus.

            Leasing the space could provide some incentive for Western’s largest secured creditor, Sandton of New York, to negotiate in the Chapter 11 proceedings. Sandton holds the loan on the Bulletin building with an original face value of about $20 million.

            The original loan was by Washington Mutual, which collapsed in the housing crisis, and was later acquired by Bank of America, which sold it to Sandton. In those cases debt is often heavily discounted and Sandton’s acquisition price has not been recorded.