Star Tribune seeks to abandon union's contract
Bankruptcy
The Star Tribune of Minneapolis returns to bankruptcy court Thursday, a day after seeking permission to void one of its labor contracts to further cut costs.
Lawyers for the newspaper, which filed for Chapter 11 bankruptcy protection in January, told Judge Robert Drain on Wednesday that it needs $3.5 million in concessions from its pressmen union as part of $20 million in total cuts from 10 unions.
"We're at a critical stage," Chief Financial Officer David Montgomery said. "We need to save every dollar we can possibly save to get us through this period and get us to the other side of the recession."
Montgomery said the nation's 15th-largest newspaper had failed to reach an agreement with the pressmen, forcing it to ask the court for the power to cancel the contract.
Drain did not indicate when he would rule. The second of three days of hearings was scheduled for Thursday afternoon in U.S. Bankruptcy Court in New York.
The Star Tribune has sought protection from creditors while it tries to reorganize its businesses and finances. Amid an industrywide decline in advertising revenue, the newspaper is burdened by heavy debt it took on when Avista Capital Partners LP bought it from McClatchy Co. in March 2007.
The cancellation of the contract would affect 116 union employees. The company has not said whether it would take similar action against unions representing another 600 workers. Besides the pressmen, the newspaper's four largest unions represent newsroom employees, drivers and mailroom workers.
As of December, the newspaper had $667 million in debt, $492 million in assets and $27 million in cash. So far, it has skipped $20 million in interest payments to lenders. From early 2007 to the end of last year, the newspaper has cut $50 million in costs.
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