The Hickory Daily Record announced on Thursday, December 31st that the newspaper has been sold.
According to HDR, David Hoffmann, a Florida-based billionaire and Washington, Missouri, native, is spearheading a $50 million deal with the owner of the Hickory Daily Record to buy a controlling stake and become chairman.
The deal shakes up leadership and offers debt relief for regional newspaper owner Lee Enterprises, which has recorded heavy losses amid the industry’s struggles to retain subscribers and advertisers as news outlets shift from print to digital.
As part of the deal, Lee CEO Kevin Mowbray is resigning with a $1.5 million payout. Chief Operating Officer Nathan Bekke will take over as interim CEO.
Lee’s primary lender, Berkshire Hathaway Finance, has agreed to cut the interest rate for five years on the newspaper chain’s roughly $450 million in debt, from 9% to 5%, saving as much as $18 million a year in interest payments.
“This transaction reflects the Board’s determination to act decisively,” Mary Junck, who has been the chair of Lee’s board for more than 20 years, said in a statement. “By strengthening the balance sheet and improving the company’s capital structure, we are putting the company in a better position to execute and create long-term value.”
Lee Enterprises, the Davenport, Iowa-based owner of the Hickory Daily Record and newspapers and other publications in 70 markets, announced it had reached an agreement with Hoffmann and other investors to sell them nearly 15.4 million shares at $3.25 per share. The deal would make Hoffmann the lead investor and is expected to make him chairman of the board, Lee said in a securities filing.
The company had about 6.3 million shares outstanding as of the end of October.
Hoffmann has committed to buying up to $35 million in shares, while other investors committed up to $15 million. A Hoffmann affiliate already owned about 10% of Lee’s shares. Quint Digital Limited, an Indian firm and another major Lee shareholder, said it is joining the deal with an $8 million investment, boosting its stake in the company to almost 15%.
Lee said it will hold a shareholder meeting to obtain approval for the deal and seek authorization to increase the number of shares it can issue to 40 million from 12 million.
The deal is expected to close in the first quarter.
Story: Arianna Mack-WHKY