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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Western pleads for an "orderly liquidation" of The Bulletin and all other assets  

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

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

 

Bend Bulletin in the news - not what a newspaper wants

Western pleads for an "orderly liquidation" of The Bulletin and all other assets

            Facing brutal economic forces sweeping the newspaper industry and perhaps its own missteps in adjusting to change, Western Communications of Bend has asked a federal bankruptcy court to approve liquidation of its assets including The Bend Bulletin, along with six other papers and its real estate holdings.

            In a May 22 filing with the court in Eugene related to its current Chapter 11 bankruptcy case, Western argued that “orderly” liquidation would produce a higher return than a protracted path into Chapter 7 of the baknruptcy code.

            Western had filed in January to reorganize its business and continue operating under Chapter 11 provisions, the second time in less than 10 years for the company. But given the company’s staggering debt load of about $30 million —much of that involving its 87,000 square foot Bend headuarters-- Western has faced an uphill battle in recent years. Insider shareholders including founding family members have at times provided infusions of capital to prop up operations.

            Addressing the decision to liquidate, the company said that it believes a Chapter 7 liquidation would result in 10-15% lower value of real estate assets, “than if sold pursuant to an orderly iiquidation.

            “Further .....the newspapers would have no going concern value, and the expenses, and carrying costs associated with the sales of the underlying assets(e.g., equipment, inventory, etc.).could equal or exceed the value of such assets.”

            Thus far since earlier receiving court approval to sell its newspapers and real estate, the company says it has seen interest from 31 parties, with five of those engaging in “follow-up discussions and negotiations.”

            The company is seeking approval by a date in June to sell one or more of its newspaper businesses which it says could be completed in July. It anticipates possible sale of real estate assets by October.

Western's liquidation analysis

            Under the liquidation proposal no current shareholders, including some management insiders and family members, would receive any compensation for their equity.

            Western’s plea to proceed with liquidation includes an estimate that total assets range from $25 million to $30 million, most of that in real estate with a “fair market value of approximately $20 million.”

            The “going concern value” of newspapers ranges from $5 million to $10 million, according to the filing.

            The largest secured creditor is Sandton Master Fund Credit Solutions III LP, a fund of New York based Sandton Capital, which had acquired the debt from Bank of America. BofA had taken over the debt from Washiington Mutual when that bank collapsed during the mortgage crisis of the previous decade.  

            It was a dispute over repayment provisions between Western and BofA that resulted in the company’s earlier 2011 Chapter 11 bankruptcy filing, from which it emerged in April of 2012.

            Western has not been making payments to Sandton for some time according to information available in the bankruptcy filing. A company such as Sandton typically acquires troubled loans at considerable discounts, and how much it paid for assuming the debt held by BofA is not publicly recorded. The note’s face value remains around $19 million.

            As Western entered the current Chapter 11 bankruptcy the court approved a “cash collateral” payment by Sandton of $1.6 million to permit the company to continue operations.

            Only days before the January 22 Chapter 11 filing, several family members and management  with equity in Western recorded claims totaling $253,000 against the company’s SW Chandler Avenue headquarters and production facility. Those are now treated as secured in second position behind the Sandton claims.

Previous posts 

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

 Bend Bulletin could be sold: Insiders have provided capital for years 
Bend Bulletin in the news - not what a newspaper wants

Early season water supplies and forecast vary widely

            As irrigation season begins  Central Oregon appears at first glance to be faring well in the early outlook for water supplies in regional river basins although the forecast paints a mixed picture for the summer ahead.

            As of May 14 the US Dought Monitor report for Oregon estimated that just under 17% of the state was abnormally dry, with no areas in drought--a considerable improvement over April 1 when 82% was in the abnormally dry or moderate drought category.

            The state is also in much better shape than neighborning Washington where Gov. Jay Inslee has already issued a drought declaration for more than 20 counties. Washington appears to be suffering most of all Western states according to the national dourght monitor statistics.

            But even with the optimistic early season conditions, the Natural Resources Conservation Service says area water managers should expect, “well below normal to near normal streamflows” ranging from 55% to 103% of normal throughout the Deschutes Basin.

            Reservoir storage in the basin ranged from a low of 73% of normal at Wickiup to 124% at Crescent Lake as of May 1.

            However, Crane Prairie above Wickiup on the Deschutes River reported 106% of average storage and the Crooked River basin reservoirs, Ochoco and Prineville, 108% and 104% respectively.

            Snowpack throughout the Deschutes and Crooked River drainages ranged from 82% in the Upper Deschutes and 95% in the Little Deschutes basins, against a staggering 307% in the Upper Crooked basin. By contrast at this time in 2018 the Upper Crooked basin snowpack was at zero.

            The early May report noted that heavy early April rains were followed by unsually warm late month temperatures that accelerated snowmelt. Not yet available are statistics that reflect the atypically cool and wet May in Central Oregon, including higher elevation snows.

             Often closely tracked with water and drought conditions is the potential for wildfires. As of May 1 the National Interagency Fire Center’s prediction for August showed above normal positibility of significant wildfires running from far north Washington state and along the Cascades to the coasts of Washington and Oregon.

            The agency’s map also shows above normal fire potential for much of northern California including the Sierras and extending along the western edge of the state to the Mexican border.