Newspaper firm seeks extension of loan deadline

Philadelphia Newspapers L.L.C., the parent company of The Inquirer, yesterday sought an extension of a March 31 deadline for repaying a $15 million loan that has kept it afloat while in bankruptcy.

In the filing with U.S. Bankruptcy Court in Philadelphia in which it asked for the extension, the company blamed its senior lenders for its inability to negotiate a new repayment deadline. Specifically, it said the senior lenders were opposed to an extension as long as the company pressed for an investigation into the unauthorized taping of a meeting with company officials. The taping was conducted by a representative of the senior lenders.

The company asked that the loan deadline be extended until the company's sale at auction was complete, a process that could take an additional three to four months. The auction is now set for April 27. It must be followed by a confirmation hearing and the eventual closing of the sale.

The auction is part of the company's reorganization plan, which calls for paying senior leaders including Angelo, Gordon & Co., CIT Group Inc., Eaton Vance Management Inc., and Credit Suisse about $67 million in cash and property to settle $318 million in debt.

The $15 million loan is separate from that debt figure. It was made to the company by Citizens Bank, Wells Fargo Foothill, and Credit Suisse Loan Funding L.L.C. and represented financing to allow the company, which also owns the Philadelphia Daily News and Philly.com, to cover cash shortfalls during bankruptcy.

The loan's March 31 deadline was predicated on the company's being out of bankruptcy by then. That schedule was disrupted when a planned November auction for the company was set aside while senior lenders appealed a U.S. District Court ruling that denied them the right to use their debt to try to purchase the company.

That appeal ended Monday, when the U.S. Court of Appeals for the Third Circuit sided with the company on the issue.

In arguing for an extension of the short-term-debt deadline, the company said it was the lenders' appeal that caused the deadline to loom without resolution.

Calls to lawyers for the senior lenders were not returned yesterday.