ADN owner seeks quick court approval to pay carriers, insurance

Alaska Dispatch News owner Alice Rogoff filed motions in U.S. Alaska Bankruptcy Court Aug. 15 seeking an expedited hearing to keep the operation functioning and to restore her employees’ health insurance benefits.

The motion for a quick hearing was granted and set for Aug. 17.

According to filings in the latest phase of Rogoff’s Chapter 11 proceedings, getting current with her Premera Blue Cross Blue Shield premiums and having cash on hand to pay her carriers to deliver the paper necessitates quick court approval of $1 million in loan financing that equals the $1 million sale price to the new owners.

Soon after the bankruptcy was filed Aug. 12, Rogoff announced to her staff that new owners were in the planning stages for taking over the newspaper ownership. The buyers are four siblings — Ryan Binkley, James Binkley, Kai Binkley Sims — and Jason Evans.

The Binkleys are fourth-generation Alaskans from the pioneering riverboat family in Fairbanks while Evans is owner of four newspapers: the Arctic Sounder, Bristol Bay Times/Dutch Harbor Fishermen and the Homer Tribune. Evans also is president of Rural Energy Enterprises and Financial Inc., a business-consulting firm.

The bankruptcy filing came one day after GCI filed to evict the Dispatch from the Northway Drive building that the Anchorage telecom owns and where the newspaper’s printing press is housed.

Formerly from the East Coast where she worked 10 years as a chief financial officer for U.S. News and World Reports, Rogoff has owned the Alaska Dispatch News since April 2014.

The Dispatch is a combined publication from an online-only news publication by that name that was established in 2008 by Tony Hopfinger and Amanda Coyne. Rogoff combined the Dispatch and the McClatchy-owned Anchorage Daily News, which was established in 1946 and became Alaska’s largest newspaper in the folding of the Anchorage Times in 1992.

Rogoff bought the Anchorage Daily News and the building for $34 million, with GCI then purchasing the Northway facility for $15 million. Rogoff wrote in her personal declaration that she took out a $13 million loan from Northrim Bank and used $6 million of her cash to pay the remaining $19 million of the sale price.

Highest on the list of priorities is paying three months past due insurance payments to Premera Blue Cross for coverage of the Dispatch’s 212 employees. Also critical is being able to pay carriers $80,000 on Aug. 17, or the newspapers will not be delivered to subscribers, Rogoff stated in the filings.

“The debtor has immediate need of cash for, among other things to pay the $262,556.99 in past due health insurance premiums, as set forth in the insurance motion,” Rogoff stated in her filing. “Debtor’s cash on hand is less than $100,000…In addition, Debtor needs to pay its carriers approximately $80,000 on Thursday, August 17, 2017. It is critical that funds be available that day. If the carriers are not paid that day, newspapers will not be delivered.”

The iconic building on Northway Drive that still proclaims the Anchorage Daily News banner was constructed 33 years ago around the three-story printing press. Extracting the Goss Headliner printing press from the building is the largest liability facing the company.

The motion filed Aug. 15, if granted, would allow Rogoff to proceed with the sale to the Binkleys and Evans. But the sale of the Alaska Dispatch won’t be a clear hand-over from buyer to seller.

Stages outlined in Rogoff’s bankruptcy filings ask Bankruptcy Court Judge Gary Straker to first allow a lump sum payment of $350,000 from the Binkleys/Evans to Rogoff that would be applied toward carrier payments and insurance premiums, and a $200,000 thereafter in weekly payments up to $1 million to make payroll and continue operating.

A separate motion was filed to explain the emergency in paying the Premera Blue Cross premiums.

“Employee morale has suffered significantly due to Premera not processing medical claims other than pharmacy benefits,” the motion states. “The past due amount, $262,556.99 is included in the cash budget for which Debtor seeks approval in its motion for a DIP (Debtor in Possession) loan, and use of cash collateral, and is a major reason why the first week’s advance under the proposed DIP loan is $350,000, whereas subsequent weekly loans are $200,000.”

Other insurances policies are also past due. State-mandated worker’s comp payments through Berkshire Hathway are behind by $26,733.68. So far, the Dispatch is not in violation with state law, however, said Rhonda Gerharz, chief investigator for special investigations, Alaska Workers Comp Division.

Rogoff also said she is behind in her Liberty Mutual liability insurance, which is past-due $10,227.75.

In her personal declaration, Rogoff wrote that a total of $421,000 would need to be paid to Premera by September to get her employees’ policies current.

Restructuring debt

It could take years for the top 20 creditors to receive payment as the Alaska Dispatch Chapter 11 filing winds its way through the courts, said Alaska bankruptcy lawyer David Bundy.

“Usually you wouldn’t have the debt worked out (prior to the sale); it would take too long otherwise,” Bundy said.

He sites the example of General Motor’s bankruptcy in 2009.

“In a very short time the productive assets were transferred to a new company that called itself GM and kept going. The old bankruptcy case is still going on. Creditors are still waiting for payment,” he said.

GCI is listed as the Alaska Dispatch’s second-highest debt in a list of 20 unsecured creditors at $304,394 owed.

This differs from GCI’s Forcible Entry and Detainer motion filed Aug. 11 in Alaska Superior Court seeking to evict the company. The amount GCI says Rogoff or the Dispatch owes is $1.4 million in back rent and utilities. No rent was paid for July or August, and the Dispatch share of the utilities, amounting to about $1,500 per day, have not been paid since February.

GCI is claiming additional damages “in excess of $1 million” to remove the Goss Headliner Press and clean up toxic ink from the Northway property.

The U.S. Bankruptcy Court in the District of Alaska will determine if the proposed sale of the Dispatch to the new owners can proceed forward, said Bundy, who is not an attorney on the Dispatch filing but was willing to explain how federal bankruptcy laws work.

“If the court approves it, it will most likely happen within a few weeks,” Bundy said. “Once it’s put together, creditors will be notified that this is to happen. At the moment, they (creditors) probably are in the dark, but before the sale occurs they would be told about it.”

The bankruptcy filing lists 21 pages of people and businesses that the Dispatch owes, and their addresses so that they can be notified by the court, as is standard in bankruptcy proceedings, Bundy said.

For the moment, a bankruptcy filing can keep GCI from barring the Dispatch from using the Northway Drive building. But GCI also has recourses.

“They can go to a judge and say, ‘we don’t want to be held off any longer,’ and ask for approval to move forward,” Bundy said.

GCI spokeswoman Heather Handyside said she could not comment further on how the bankruptcy filing impacts the company’s move to evict the Dispatch. On Aug. 11, she said the company “can’t keep sustaining their operations” and that the company wants to take control of its facility that it purchased with the intent to consolidate its own warehouse operations.

The Dispatch was originally supposed to be out of Northway by November 2015, then by December 2016, but was unable to complete the move and soon thereafter stopped paying its portion of utilities and, most recently, its rent.

In the Motion for Sale of Assets, Free and Clear of Liens,” Rogoff is selling Binkley/Evans the company assets including the printing presses at Northway and the currently unavailable press on Arctic Boulevard for $1 million, with certain conditions that will either be approved or denied after the Aug. 17 court hearing.

According to the Asset Purchase Agreement that Rogoff is asking the court to approve, Rogoff and the Binkley Co. worked out a deal that would keep the new owners unencumbered from the Dispatch’s current debt. If the deal falls through, after the DIP loan is granted, the buyers would gain 3 percent of the ultimate selling price and reimbursement of $100,000.

Largest debts

According to the list of 20 largest creditors, the biggest debts relate to the Dispatch’s quest for a new home to house its printing presses. Because it cannot dismantle and move the Goss Headliner press built into the property at Northway, a new printing press needed to be purchased as well as finding a new place to put it.

Toward that end, Rogoff leased warehouse space owned by Arctic Partners at 5900 Arctic Boulevard. A used press worth about $400,000, a Goss Urbanite, was installed in the warehouse. But that lease is also in litigation, and M&M Wiring Service Inc., owner Mark Miller has placed a lien on the Arctic Boulevard building.

M&M ranks No. 1 on the list of 20 unsecured creditors with a debt of $491,219.

Rogoff had stated in her response to press inquiries after the GCI eviction notice that, “(t)he events that led us to this point have been extremely complex.”

If she was speaking about the printing press, that was no exaggeration.

Bruce Ross, a longtime printer in Alaska who works for Alaska Printers Supply, said the Goss Headliner the ADN purchased prior to its move from Potter Drive in 1984 for its new Northway Drive quarters “wasn’t put in the building with the idea that the press would ever be moved. If it were, you could disconnect, dismantle it and roll it out. But the building was built with floors connected to the press.”

M&M was the company hired to wire the press and the building. Precision Maintenance Fabricating was hired to prepare the concrete floor.

But according to a second contractor, Shane Perrins of Frontline Construction, the initial concrete work had to be completed twice.

“They poured concrete but didn’t follow inspection laws and they didn’t follow drawings like the municipality requires,” Perrins said. “We had to cut out their concrete work and re-pour because it wasn’t engineered right, both for the new bay (for delivery trucks) and inside the building. Alice had to pay twice because the original contractor didn’t do the work per municipal requirements.”

The warehouse currently holds two presses, one that prints advertising supplements and the other that is meant to replace the current press at Northway.

But the warehouse is “no where near” close to receiving its Certificate of Occupancy, said the Municipality of Anchorage’s Chief Municipal Inspector Hans Gisler. The Dispatch does have a permit, however, to continue work until it meets occupancy and use requirements.

“They are not ready to use the building because there are a whole bunch of inspections that need to be done,” Gisler said. “I haven’t seen any work for quite a while. I don’t think they are even close to getting a Certificate of Occupancy.”

Earlier, a stop order was imposed on the project by the municipality, Gisler said.

“It was later lifted when the new drawings had to be brought in for work by the new contractor,” Gisler said.

Perrins said the work project at the warehouse has been “on hold” for a few months. Currently, the debt owed Frontline Construction is listed as $68,901 but Perrins said the latest invoice brings the total to $90,000 owed him.

Nonetheless, he said, “I’m willing to help out Alice any way I can. I’m in touch with her, and I believe she’s good for the amount she owes me.”

He doesn’t blame Rogoff.

“She trusted someone and things weren’t done properly. It took time to gain the muni’s faith that the project was moving in the right direction,” Perrins said.

Rogoff argued in a declaration accompanying the bankruptcy motions that she was willing to take a loss on her $34 million newspaper investment “to maintain robust journalism in Alaska, and as an investment in the future of the company.” But she wrote she is losing about $125,000 per week.

New digital platforms are not paying off. She estimates 4,000 digital-only subscribers and does not list print circulation numbers, which are thought to be in the 33,000 to 40,000 range, down from 57,622 daily circulation claimed in 2014 at the time of McClatchy News’ sale of the ADN to Rogoff.

“Since the purchase of ADN, I have personally financed ADN’s operations, cash shortfalls, and capital expenditures,” she wrote. “In addition to the Northrim Bank Loan, I guaranteed the Arctic Road lease and certain removal costs related to the GCI lease. However, personally financing the future operations of ADN in addition to the current personal guarantees is no longer feasible.”


Naomi Klouda can be reached at [email protected].

08/16/2017 - 12:51pm