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Debt | 12 Months Ended
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Sep. 27, 2015
Debt [Abstract] |
Debt Disclosure [Text Block] | DEBT On March 31, 2014, we completed a comprehensive refinancing of our debt (the “2014 Refinancing”), which includes the following:
• | $400,000,000 aggregate principal amount of 9.5% Senior Secured Notes (the “Notes”), pursuant to an Indenture dated as of March 31, 2014 (the “Indenture”).
• | $250,000,000 first lien term loan (the "1 st Lien Term Loan") and $40,000,000 revolving facility (the "Revolving Facility") under a First Lien Credit Agreement dated as of March 31, 2014 (together, the “1 st Lien Credit Facility”).
• | $150,000,000 second lien term loan under a Second Lien Loan Agreement dated as of March 31, 2014 (the “ 2 nd Lien Term Loan”).
The Notes, 1 st Lien Credit Facility and 2 nd Lien Term Loan enabled us to repay in full, including accrued interest, and terminate, on March 31, 2014: (i) the remaining principal balance of $593,000,000 under our previous 1 st lien agreement and (ii) the remaining principal balance of $175,000,000 under our previous 2 nd lien agreement. We also used the proceeds of the refinancing to pay fees and expenses totaling $30,931,000 related to the 2014 Refinancing. In May 2013, we refinanced the $94,000,000 remaining balance of notes secured by Pulitzer and its subsidiaries (the “New Pulitzer Notes”). On June 25, 2015 (the "Pulitzer Debt Satisfaction Date"), we repaid the remaining balance of the New Pulitzer Notes triggering certain changes to the collateral of our remaining debt as discussed more fully below. Notes The Notes are senior secured obligations of the Company and mature on March 15, 2022. Interest The Notes require payment of interest semiannually on March 15 and September 15 of each year, at a fixed annual rate of 9.5%. Redemption We may redeem some, or all, of the principal amount of the Notes at any time on or after March 15, 2018 as follows:
Period Beginning | Percentage of Principal Amount |
March 15, 2018 | 104.75 |
March 15, 2019 | 102.38 |
March 15, 2020 | 100.00 |
We may redeem up to 35% of the Notes prior to March 15, 2017 at 109.5% of the principal amount using the proceeds of certain future equity offerings. If we sell certain of our assets or experience specific types of changes of control, we must, subject to certain exceptions, offer to purchase the Notes at 101% of the principal amount. Any redemption of the Notes must also satisfy any accrued and unpaid interest thereon. Covenants and Other Matters The Indenture and 1 st Lien Credit Facility contains restrictive covenants as discussed more fully below. However, certain of these covenants will cease to apply if the Notes are rated investment grade by either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group and there is no default or event of default under the Indenture. 1 st Lien Credit Facility The 1 st Lien Credit Facility consists of the $250,000,000 1 st Lien Term Loan that matures in March 2019 and the $40,000,000 Revolving Facility that matures in December 2018. The 1 st Lien Credit Facility documents the primary terms of the 1 st Lien Term Loan and the Revolving Facility. The Revolving Facility may be used for working capital and general corporate purposes (including letters of credit). At September 27, 2015, after consideration of letters of credit, we have approximately $32,935,000 available for future use under the Revolving Facility. Interest Interest on the 1 st Lien Term Loan, which has a principal balance of $180,872,000 at September 27, 2015, accrues, at our option, at either (A) LIBOR plus 6.25% (with a LIBOR floor of 1.0%) or (B) 5.25% plus the higher of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%, or (iii) one month LIBOR plus 1.0% (with a floor of 2.0%). Interest is payable quarterly. The 1 st Lien Term Loan was funded with an original issue discount of 2.0%, or $5,000,000, which is being amortized as interest expense over the life of the 1 st Lien Term Loan. Interest on the Revolving Facility, which has a principal balance of zero at September 27, 2015, accrues, at our option, at either (A) LIBOR plus 5.5%, or (B) 4.5% plus the higher of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%, or (iii) one month LIBOR plus 1.0%. Principal Payments Quarterly principal payments of $6,250,000 are required under the 1 st Lien Term Loan, with other payments made based on 90% of excess cash flow of Lee Legacy ("Lee Legacy Excess Cash Flow), as defined, or from proceeds of asset sales, as defined, from our subsidiaries other than the Pulitzer Subsidiaries. We may voluntarily prepay principal amounts outstanding or reduce commitments under the 1 st Lien Credit Facility at any time without premium or penalty, upon proper notice and subject to certain limitations as to minimum amounts of prepayments. Following the Pulitzer Debt Satisfaction Date, the excess cash flow of Pulitzer, as defined ("Pulitzer Excess Cash Flow"), may be used to pay down the 1 st Lien Term Loan if not accepted by the 2nd Lien Term Loan lenders, as discussed more fully below under the heading "2 nd Lien Term Loan". 2015 payments made under the 1 st Lien Term Loan are summarized by quarter and fiscal year as follows:
(Thousands of Dollars) | December 28 2014 |  | March 29 2015 |  | June 28 2015 |  | September 27 2015 |  | 2015 |
Mandatory | 6,250 |  | 6,250 |  | 6,250 |  | 6,250 |  | 25,000 |
Voluntary | 5,000 |  | 4,000 |  | 4,000 |  | — |  | 13,000 |
Asset sales | — |  | — |  | — |  | — |  | — |
Excess cash flow | — |  | — |  | — |  | 7,878 |  | 7,878 |
| 11,250 |  | 10,250 |  | 10,250 |  | 14,128 |  | 45,878 |
Covenants and Other Matters The 1 st Lien Credit Facility requires that we comply with certain affirmative and negative covenants customary for financing of this nature, including a maximum total leverage ratio, which is only applicable to the Revolving Facility. The 1 st Lien Credit Facility restricts us from paying dividends on our Common Stock. It also restricts us from repurchasing Common Stock in excess of $5 million per year. These restrictions no longer apply if Lee Legacy leverage is below 3.25x before and after such payments. Further, the 1 st Lien Credit Facility restricts or limits, among other things, subject to certain exceptions, the ability of the Company and its subsidiaries to: (i) incur indebtedness, (ii) enter into mergers, acquisitions and asset sales, (iii) incur or create liens and (iv) enter into transactions with certain affiliates. The 1 st Lien Credit Facility contains various representations and warranties and may be terminated upon occurrence of certain events of default. The 1 st Lien Credit Facility also contains cross-default provisions tied to the terms of each of the Indenture and 2 nd Lien Term Loan. 2 nd Lien Term Loan The 2 nd Lien Term Loan, which has a balance of $145,000,000 at September 27, 2015, bears interest at a fixed annual rate of 12.0%, payable quarterly, and matures in December 2022. Principal Payments There are no scheduled mandatory amortization payments required under the 2 nd Lien Term Loan. Under the 2 nd Lien Term Loan, subject to certain other conditions, Pulitzer Excess Cash Flow must be used, (a) prior to March 31, 2017, to make an offer to the 2 nd Lien Lenders to prepay amounts under the 2 nd Lien Term Loan at par (which offer the 2 nd Lien Lenders may accept or reject; if rejected, we may use the Pulitzer Excess Cash Flow to prepay amounts under the 1 st Lien Credit Facility or repurchase Notes in the open market), and (b) after March 31, 2017, to pay such amounts under the 2 nd Lien Term Loan at par. In November 2015, $3,326,000 of the September 2015 excess cash flow payment was not rejected and according to the 2 nd Lien Term Loan was prepaid at par. Pulitzer Excess Cash Flow includes a deduction for interest costs incurred under the 2 nd Lien Term Loan after the Pulitzer Debt Satisfaction Date. In addition, other changes to settlement of certain intercompany costs between the Company and Pulitzer will be affected, with the net result being a reduction in the excess cash flows of Pulitzer from historically reported levels. Subject to certain other conditions in the 2 nd Lien Term Loan, the balance of the 2 nd Lien Term Loan will be repaid at par from proceeds from asset sales by Pulitzer or the Pulitzer Subsidiaries that are not reinvested. For the 13 weeks ended September 27, 2015, we repaid $5,000,000 of the 2 nd Lien Term Loan, at par, due to the sale of real estate at one of our Pulitzer properties. Subsequent to September 27, 2015 an additional $2,300,000 was repaid at par with net proceeds from the sale of Pulitzer assets. Voluntary payments under the 2 nd Lien Term Loan are subject to call premiums as follows:
Period Beginning | Percentage of Principal Amount
March 31, 2014 | 112
March 31, 2017 | 106
March 31, 2018 | 103
March 31, 2019 | 100
Covenants and Other Matters The 2 nd Lien Term Loan requires that we comply with certain affirmative and negative covenants customary for financing of this nature, including the negative covenants under the 1 st Lien Credit Facility discussed above. The 2 nd Lien Term Loan contains various representations and warranties and may be terminated upon occurrence of certain events of default. The 2 nd Lien Term Loan also contains cross-default provisions tied to the terms of the Indenture and 1 st Lien Credit Facility. In connection with the 2 nd Lien Term Loan, we entered into a Warrant Agreement dated as of March 31, 2014 (the “Warrant Agreement”) between the Company and Wells Fargo Bank, National Association. Under the Warrant Agreement, certain affiliates or designees of the 2 nd Lien Lenders received on March 31, 2014 their pro rata share of warrants to purchase, in cash, an initial aggregate of 6,000,000 shares of Common Stock, subject to adjustment pursuant to anti-dilution provisions (the “Warrants”). The Warrants represent, when fully exercised, approximately 10.1% of shares of Common Stock outstanding at March 30, 2014 on a fully diluted basis. The exercise price of the Warrants is $4.19 per share. The Warrant Agreement contains a cash settlement provision in the event of a change of control prior to March 31, 2018 as well as other provisions requiring the Warrants be measured at fair value and included in other liabilities in our Consolidated Balance Sheets. We remeasure the fair value of the liability each reporting period, with changes reported in other non-operating income (expense). The initial fair value of the Warrants was $16,930,000. See Notes 1, 9 and 12. In connection with the issuance of the Warrants, we entered into a Registration Rights Agreement dated as of March 31, 2014 (the “Registration Rights Agreement”). The Registration Rights Agreement requires, among other matters, that we use our commercially reasonable efforts to maintain the effectiveness for certain specified periods a shelf registration statement related to the shares of Common Stock to be issued upon exercise of the Warrants. Pulitzer Notes In May 2013, we refinanced the $94,000,000 then outstanding balance of the Pulitzer Notes (the “New Pulitzer Notes”) with BH Finance LLC ("Berkshire") a subsidiary of Berkshire Hathaway Inc. The New Pulitzer Notes bore interest at 9%, payable quarterly. On the Pulitzer Debt Satisfaction Date of June 25, 2015, we repaid the remaining balance of the New Pulitzer Notes in full. Security The Notes and the 1 st Lien Credit Facility are fully and unconditionally guaranteed on a first-priority basis by each of the Company's material domestic subsidiaries, excluding MNI, Pulitzer Inc. ("Pulitzer") and its subsidiaries (collectively, the "Pulitzer Subsidiaries") and TNI (the "Lee Legacy Assignors"). The Notes, the 1 st Lien Credit Facility and the subsidiary guarantees are secured, subject to certain exceptions, priorities and limitations, by perfected security interests in all property and assets, including certain real estate, of the Lee Legacy Assignors, other than the capital stock of MNI and any property and assets of MNI (the “Lee Legacy Collateral”), on a first-priority basis, equally and ratably with all of the Lee Legacy Assignors' existing and future obligations. The Lee Legacy Collateral includes, among other things, equipment, inventory, accounts receivables, depository accounts, intellectual property and certain of their other tangible and intangible assets. Also, the Notes and the 1 st Lien Credit Facility are secured, subject to certain exceptions, priorities and limitations in the various agreements, by first-priority security interests in the capital stock of, and other equity interests owned by, the Lee Legacy Assignors (excluding the capital stock of MNI). The Notes and 1 st Lien Credit Facility are subject to a Pari Passu Intercreditor Agreement dated March 31, 2014. Following the Pulitzer Debt Satisfaction Date, the Notes, the 1 st Lien Credit Facility and the subsidiary guarantees are also secured, subject to permitted liens, by a second-priority security interest in the property and assets of the Pulitzer Subsidiaries other than assets of or used in the operations or business of TNI (collectively, the “Pulitzer Collateral”) that become subsidiary guarantors (the "Pulitzer Assignors"). On the Pulitzer Debt Satisfaction Date, the Pulitzer Assignors became a party to the 1 st Lien Guarantee and Collateral Agreement on a second lien basis. Also, the Notes and the 1 st Lien Credit Facility are secured, subject to certain exceptions, priorities, and limitations in the various agreements, by second-priority security interests in the capital stock of, and other equity interests in, the Pulitzer Assignors and Star Publishing’s interest in TNI. Following the Pulitzer Debt Satisfaction Date, the 2 nd Lien Term Loan is fully and unconditionally guaranteed on a joint and several first-priority basis by the Pulitzer Assignors, pursuant to a Second Lien Guarantee and Collateral Agreement dated as of March 31, 2014 (the “2 nd Lien Guarantee and Collateral Agreement”) among the Pulitzer Assignors and the 2 nd Lien collateral agent. Under the 2 nd Lien Guarantee and Collateral Agreement, the Pulitzer Assignors have granted (i) first-priority security interests, subject to certain priorities and limitations in the various agreements, in the Pulitzer Collateral and (ii) have granted first-priority lien mortgages or deeds of trust covering certain real estate, as collateral for the payment and performance of their obligations under the 2 nd Lien Term Loan. Also, under the 2 nd Lien Guarantee and Collateral Agreement, the Lee Legacy Assignors have granted (i) second-priority security interests, subject to certain priorities and limitations in the various agreements, in the Lee Legacy Collateral, and (ii) have granted second-priority lien mortgages or deeds of trust covering certain real estate, as collateral for the payment and performance of their obligations under the 2 nd Lien Term Loan. Assets of, or used in the operations or business of, MNI are excluded. The rights of each of the collateral agents with respect to the Lee Legacy Collateral and the Pulitzer Collateral are subject to customary intercreditor and intercompany agreements. Other We incurred $30,931,000 of fees and expenses related to the 2014 Refinancing, including a $1,750,000 premium (1% of the principal amount) related to the redemption of the previous 2 nd lien agreement and $5,000,000 original issue discount on the 1 st Lien Term Loan. In addition, at the date of the 2014 Refinancing we had $10,549,000 of unamortized present value adjustments related to the previous 1 st lien agreement and previous 2 nd lien agreement. We also recognized original issue discount of $16,930,000 on the 2 nd Lien Term Loan related to the Warrants. Certain of the unamortized present value adjustments, the new fees and expenses and a portion of the value of the Warrants were charged to expense upon completion of the 2014 Refinancing while the remainder of such costs have been capitalized and are being amortized over the lives of the respective debt agreements. Debt financing costs are summarized as follows:
(Thousands of Dollars) |  |
Prepayment premium - previous 2 nd lien agreement |  | 1,750 |
Unamortized loan fees from previous credit agreements |  | 10,549 |
Fees paid in cash to arrangers, lenders, attorneys and others |  | 24,181 |
Original issue discount - 1 st Lien Term Loan |  | 5,000 |
Fair value of Warrants granted to 2nd Lien Lenders |  | 16,930 |
|  | 58,410 |
Charged to expense as a result of debt extinguishment |  | 20,591 |
Capitalized debt financing costs |  | 37,819 |
Amortization of debt financing costs totaled $4,693,000 and $2,145,000 in 2015 and 2014, respectively. Amortization of such costs is estimated to total $4,198,000 in 2016, $4,380,000 in 2017, $4,500,000 in 2018, $4,262,000 in 2019 and $4,200,000 in 2020. At September 27, 2015 we have $31,793,000 of unamortized debt financing costs included in other assets in our Consolidated Balance Sheets. Debt is summarized as follows:
|  |  | Interest Rates (%)
(Thousands of Dollars) | September 27 2015 |  | September 28 2014 |  | September 27 2015
Revolving Facility | — |  | 5,000 |  | 5.65
1st Lien Term Loan | 180,872 |  | 226,750 |  | 7.25
Notes | 400,000 |  | 400,000 |  | 9.50
2 nd Lien Term Loan | 145,000 |  | 150,000 |  | 12.00
New Pulitzer Notes | — |  | 23,000 |  | 9.00
| 725,872 |  | 804,750 |  |
Less current maturities of long-term debt | 25,000 |  | 31,400 |  |
Total long-term debt | 700,872 |  | 773,350 |  |
At September 27, 2015, our weighted average cost of debt, excluding amortization of debt financing costs, is 9.4%. Aggregate minimum required maturities of debt excluding amounts required to be paid from excess cash flow requirements total $25,000,000 in 2016, $25,000,000 in 2017, $25,000,000 in 2018, $105,872,000 in 2019, $0 in 2020 and $545,000,000 thereafter. Liquidity At September 27, 2015, after consideration of letters of credit, we have approximately $32,935,000 available for future use under our Revolving Facility. Including cash, our liquidity at September 27, 2015 totals $44,069,000. This liquidity amount excludes any future cash flows. We expect all interest and principal payments due in the next twelve months will be satisfied by our cash flows, which will allow us to maintain an adequate level of liquidity. The Warrants, if and when exercised, would provide additional liquidity in an amount up to $25,140,000 subject to a reduction for any amounts the Company may elect to use to repay our 1 st Lien Term Loan and/or the Notes. The 2014 Refinancing significantly improved our debt maturity profile. Final maturities of our debt have been extended to dates from December 2018 through December 2022. As a result, we believe refinancing risk has been substantially reduced for the next several years. There are numerous potential consequences under the Notes, 1st Lien Credit Facility and 2nd Lien Term Loan, if an event of default, as defined, occurs and is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events of default would give rise to the right of the applicable lender(s) to exercise their remedies under the Notes, 1st Lien Credit Facility and 2nd Lien Term Loan, respectively, including, without limitation, the right to accelerate all outstanding debt and take actions authorized in such circumstances under applicable collateral security documents. Our ability to operate as a going concern is dependent on our ability to remain in compliance with debt covenants and to repay, refinance or amend our debt agreements as they become due. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan have only limited affirmative covenants with which we are required to maintain compliance. We are in compliance with our debt covenants at September 27, 2015.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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