Journal Register, Publisher, Files for Bankruptcy -Bloomberg

The publisher of the New Haven Register would cancel its stock and become a closely held company, owned by its lenders under a proposed reorganization plan filed in U.S. Bankruptcy Court in New York. It listed debt of as much as $1 billion and assets of between $100 million and $500 million in Chapter 11 documents.

Journal Register Company Files for Chapter 11 to Implement Pre-Negotiated Debt Restructuring; Expects Normal Operations to Continue Uninterupted -Journal Register Company Website

Saturday, 21 February 2009

Yardley, PA, February 21, 2009 – Journal Register Company (the “Company”) (PINKSHEETS: JRCO) today announced that the Company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement a pre-negotiated plan of reorganization (the “Plan”) with certain of its secured lenders designed to substantially reduce the Company’s debt.  The Company intends to continue to operate as usual, and does not anticipate any business interruption during the restructuring. -continue reading at the above link

There are many debt ratios which one can apply to measure a company’s ability to service debt, I’ll Just do the Cash Flow to Debt Ratio here.  This is more Alan Mutter‘s turf so ask him for those numbers (or verify mine).

JRCO’s operating cash flow for the year ended December 2007 was $54million

JRCO’s Total Debt for the year ended December 2007 was  $624.8million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 0.086 or 8.6%

As investopedia states: Under more typical circumstances, a high double-digit percentage ratio would be a sign of financial strength, while a low percentage ratio could be a negative sign that indicates too much debt or weak cash flow generation.

As a comparison: Lee Enterprises (LEE)

LEE’s operating cash flow for the year ended September 2008 was $128million

LEE’s Total Debt for the year ended September 2008 was  $1337million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 0.095 or 9.5%

As a comparison: The Washington Post (WPO)

WPO’s operating cash flow for the year ended December 2007 was $581million

WPO’s Total Debt for the year ended December 2007 was  $490million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 1.185 or 119% – ample cash flow to service debt.   Oh Journal Register, where did you go wrong?  How does a company with one tenth the cash flow of The Washington Post have over one and a quarter times its debt? Lee, you are next.