The Boston Herald has more than $31 million of debt and other obligations primarily in severance and pension obligations to employees, said the company in one of its court filings on Friday that detailed why it filed for bankruptcy protection and agreed to be sold to GateHouse Media.
By comparison, the assets for the Herald are $6 million, which is primarily cash and money owed, shows court documents from the company’s filing in a Delaware federal bankruptcy court.
Patrick Purcell the Publisher of the Boston Herald announced the bankruptcy filing by the newspaper and the subsequent sale to GateHouse to staffers at the Herald on Friday in the newsroom of the publication.
GateHouse agreed to buy the newspaper for $4.5 million. The sale includes cash of $4.5 million and as much as $500,000 in employee paid time off. Investment banker Dirks Van Essen & Murray was hired by the Herald last September to located potential buyers for the paper, showed court documents.
Fifteen potential buyers were identified, but in the end GateHouse ended up being the only one interested in buying the Herald, said the court filing on Friday.
GateHouse, as part of the bid it gave, did not want to recognize any of the employees’ collective bargaining agreements with the newspaper. Approximately 140 of the 240 employees with the Herald are members of a union, said the filing.
The filing showed that GateHouse wanted to be free and clear of all health, legacy pension and other obligations to workers at the Herald.
There exists the possibility of another buyer emerging during the ongoing bankruptcy process. However, the filing said that no competing bidder would likely emerge that would be willing to buy the debtors’ assets as well as assume the current employment, benefits and pension obligations.
The earnings at the company prior to interest, taxes, depreciation, and amortization, an important measure for financial performance, will be according to the paper’s filing a loss of $2.9 million for the year ending July 1 of 2018.
Revenue for the Herald for that period will be $33.8 million, of which approximately two thirds is paid circulation including subscription and newspaper sales with one-third of the revenue from online and print advertising, show court documents with the filing.
Recent increases in revenue from online advertising has not been sufficient to offset the declines in revenue from print, said the newspaper.
The filing showed that over 50% of the expenses of the Herald are payroll and benefits for employees.