Minneapolis Star-Tribune Stops Paying Its Debt, In Danger Of Bankruptcy

11/02/2008 05:12 am ET | Updated May 25, 2011

The Star Tribune of Minneapolis said on Wednesday that it had stopped making payments on its debts, the latest evidence of the trouble the newspaper industry is having with debt loads it took on in 2006 and 2007.

The Star Tribune skipped a $9 million quarterly payment to its senior creditors that was due on Tuesday, said Chris Harte, the publisher and chairman. The paper has been in default since June, when it began missing payments on its smaller junior debt.

With advice from the Blackstone Group, The Star Tribune has been trying to negotiate new terms with its lenders, a consortium of banks, insurance companies, hedge funds and others.

The paper has cut its staff and reduced other operating costs, while trying to obtain wage and work rule concessions from its unions.

The default means that lenders could force a bankruptcy, but they have been reluctant to take that step with battered newspaper companies as long as there appeared to be a chance of agreeing on new repayment terms.

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