This has been a rare week of good news for The Seattle Times. On Monday, members of the Pacific Northwest Newspaper Guild voted to let the newspaper's parent, the Seattle Times Co., freeze its pension-fund contributions indefinitely. The vote saved the Times Co. from having to kick in an estimated $14 million in accelerated annual pension fund payments, starting this October when a temporary two-year freeze ends.
And this morning, in a letter to Seattle Times readers, the four members of the Blethen family who control the majority of the Times Co. voting stock announced the company had refinanced its debt with its bankers. The Blethens said the refinancing puts to rest concerns the Times Co. might have to seek Chapter 11 bankruptcy protection from its creditors, a move that several other debt-laden newspaper companies have taken recently. "We avoided the cost, additional downsizing and uncertainty of having to use bankruptcy to stretch out the debt," Times Co. Chief Executive Frank Blethen and company president Carolyn Kelly wrote in a separate memo to the newspaper's staff.
"The Seattle Times," the Blethens said in their letter, "is here to stay."Characteristically, neither the letter nor the memo disclosed details of the agreement between the usually secretive Seattle Times Co. and its bankers. Times officials did not reply to a request by Seattle Business for additional information.
Blethen told the Puget Sound Business Journal the length of the latest renegotiated agreement with the banking group was less than ten years, but declined to elaborate.
In a filing with the King County Recorder's office Thursday, the
Seattle Times Co. put up two downtown parcels as security for at least
$71.6 million in debt it currently owes its consortium of lender banks, the Business Journal reported.
A similar deed of trust was recorded last March covering the Times
printing facilities in Bothell.
The Times Co. has been laboring under the burden of several business decisions which have cost it more than $250 million since 1998. (A complete report by Seattle Business on the Times' financial problems can be read here.) The Times' lenders have forced the company to sell several parcels of Seattle area real estate and its chain of newspapers in Maine. In February of last year, Blethen pleaded with legislators in Olympia for a tax break, telling them the Times was "hanging on by our fingertips."
Last August, Blethen told the New York Times that the Seattle Times' finances had bottomed out. In his memo to the Times staff today he said paper's total revenue fell by 25 percent for all of 2009 after dropping "through the floor" in late 2008. The newspaper slashed its spending by nearly $90 million in 2008 and 2009 and cut its total workforce by about 25 percent. It has shrunk its newsroom staff by 40 percent in the last five years.
In his staff memo, Blethen said the debt restructuring and disposing of the company's money-losing Maine newspapers will give the Times Co. time to pay down its debt and plan for the future. Neither the memo nor the Blethen family's letter mentioned the company's pension fund shortfall, which union officials said had reached $40 million by last year. In a filing with the Securities and Exchange Commission early last year (see p. 52 of its 2008 annual report) McClatchy Co., which owns 49.5 percent of the Seattle Times Co., cited the Times' pension liabilities as the reason for writing down its investment in the company to zero. Last month, the Pacific Northwest Newspaper Guild, which represents about 400 Times employees, said on its blog that Times officials had disclosed that the pension plan remains underfunded and is expected to continue in its depleted condition, despite the stock market's rebound.
Yoko Kuramoto-Eidsmoe, the Newspaper Guild's administrative officer, declined to give specifics about the union's pension-fund vote on Monday. But she said some Guild members were upset at extending the freeze on Times' pension fund contributions indefinitely. "It was by no means unanimous," Kuramoto-Eidsmoe said. "It's safe to say the no votes were 'hell no' votes."
Updated with additional information from other sources and to fix an inaccurate time reference.