POTTSTOWN PA – Borrowing money it couldn’t pay back led in 1990 to the downfall of Ingersoll Publications, a company that formerly managed The (Pottstown PA) Mercury newspaper. Now it may also be the undoing of The Mercury’s current owner, Journal Register Company (JRC).
The Mercury is Lower Pottsgrove (PA) Township‘s newspaper of record for the publication of legal notices.
JRC, based in Yardley PA, announced Friday (Feb. 6, 2009) on its website that a legal understanding negotiated last July with its lenders, known as a forbearance agreement, had terminated. Its expiration places in further doubt JRC’s ability to get out from under a crushing debt load of more than $625 million, industry analysts say.
Much of its financial burden was incurred in 2004 when JRC expensively bought newspapers in Michigan, just as automobile manufacturing began to hit the skids. Ironically, Ingersoll – for which JRC once had been seen as a savior – collapsed because it also paid too much for newspaper companies, using primarily junk bonds as leverage.
The forbearance agreement kept financial wolves from JRC’s door. Under it, the company was not required to make interest payments on money it owes investors, but in return it was given until only Jan. 16 (2009) to definitively describe how it would restructure and right itself.
That deadline came and went, and the agreement ended. “The company remains in active discussions with its lenders regarding a possible restructuring,” JRC said in Friday’s statement, but added, “there can be no assurance that the ongoing discussions will result in an agreement … or that its lenders will not seek to enforce their rights under the credit agreement.”
Those rights include a variety of ways for creditors to recoup at least a portion of what they’re owed. That often includes liquidating assets.
A handful of managers and owners of local businesses that advertise in The Mercury are now openly discussing what they quietly feared months earlier: the possibility the paper could again be sold or, worse, closed. One Boyertown-based banker several weeks ago said she heard a sale would happen in March; a representative of a Pottstown-based post-secondary school last week said he’d heard April. Both asked not to be identified by name.
Mercury employees are equally distressed. Memos they reportedly received in December were said to announce that corporate contributions to their 401K retirement plans were being discontinued. Some reporters claim they’ve overheard discussions the Pottstown paper would be merged with The (Norristown PA) Times Herald and The (Lansdale PA) Reporter to create a single daily edition covering all of Montgomery County.
Mercury management, for its part, so far has been publicly silent on both facts and speculation. In months past the newspaper published verbatim, and often prominently, various JRC press releases. To date it has not reported on the forbearance agreement failure, or on JRC’s recent closing of newspapers in Germantown, Mount Airy, West Oak Lane, Olney, Oxford, Coatesville, Downingtown, Quakertown, Doylestown, Conshohocken, Plymouth Meeting and others in its so-called Philadelphia cluster.
Pottstown area business and civic leaders, even those sharply critical of The Mercury, want it to survive. There’s good reason, Mercury Editor Nancy March contends. “Newspapers are vital to your town and your community,” she wrote Monday (Feb. 9, 2009) in her blog on the newspaper’s website.
“I know there is much written and said about the demise of newspapers,” March conceded. “But I know with as much certainty that we are as relevant to our community as ever.”
Editor’s note: In the interest of full disclosure, Sanatoga Post Managing Editor Joe Zlomek served as publisher and chief operating officer of The Mercury in 1989 and 1990. He worked as an independently contracted correspondent, columnist and editorial writer for The Mercury in 1998 and 1999.