ADN bankruptcy hearing to continue Friday
The newspaper carriers who deliver the Alaska Dispatch News will be paid $80,000 due Friday morning, Aug. 18, after a bankruptcy judge allowed Northrim Bank to “carve out” that amount from owner Alice Rogoff’s account.
The allowance meant survival of the newspaper at least for a day after its financial director Erin Austin was able to convince the judge the daily newspaper wouldn’t be delivered without this payment.
Payment for ads and subscriptions — the ability for the newspaper to remain in business — hinge on getting out the paper each day, Austin said.
“Carriers would walk off the job,” she said, if the checks weren’t waiting for them in the morning.
Northrim Attorney Michael Parise proposed the payout for the carriers from the loan after objecting that the deal shouldn’t move forward without a new loan agreement with Rogoff, who has a $10 million balance on the loan she took out to buy the Anchorage Daily News in 2014.
After more than two hours of discussion, Judge Gary Spraker seemed prepared to grant Rogoff her request to accept $1 million in loan financing from the proposed new owners, the Binkley Co.
Parise objected, saying Northrim was reluctant to see the deal move forward without protections in place for the bank’s $10 million loan.
“There is nothing to protect the bank. There is no equity in the assets to protect us,” Parise said. “I think we’re getting ahead of ourselves to do this before an extension is in place.”
Northrim wanted the judge to hold off until Northrim could secure a new loan contract with Rogoff now that the terms of her loan have changed in light of the bankruptcy filing. She is not late in her payments, the attorney said, but she is in a technical default by virtue of the bankruptcy.
The motions that would move the Dispatch’s financial rescue deal forward — allowing a new potential team of owners to loan $1 million in emergency funding to the Alaska Dispatch to keep the doors open and pay immediate bills including past due health insurance premiums — were continued to another hearing set for 1 p.m. Friday at the U.S. Federal Bankruptcy Court, Alaska Division.
That means the health insurance payment for the Dispatch’s 212 employees will wait for Friday’s court decision. Rogoff has argued in motions that the carrier bill and Premera Blue Cross payment are critical to be paid immediately. Other debts are to be worked out in the coming weeks through payouts of the $1 million from the Binkley Co.
Rogoff has declared in court filings that the paper is losing about $125,000 per week.
Rogoff did not appear in court but communicated telephonically. Ryan Binkley, one of the new prospective owners, testified to questions about how the loan of funds would help save the organization from total shutdown.
A half dozen attorneys also appeared representing creditor clients: GCI, the landlord to Alaska Dispatch in the old Anchorage Daily News building where the printing press is located; the Municipality of Anchorage, which is owed $56,516 in back taxes; the attorney for M&M Wiring Services, owed $491,219 and the largest unsecured creditor; Premera Blue Cross, owed more than $400,000 by Sept. 1; Eagle Web Press, owed $58,817, and Arctic Partners, owed $143,871.
The payment to the Dispatch’s newspaper delivery crews was nearly postponed until the next hearing when Northrim Bank’s attorney objected to the Debtor-in-Possession Loan, or DIP, loan moving forward.
The bank is carrying a $10.2 million balance on a $13 million loan made to Rogoff in 2014 for part of the $34 million purchase price of the Anchorage Daily News.
That makes the bank Rogoff’s largest secured creditor, though it is a private loan and not one encumbered directly to the Dispatch, Rogoff told Judge Gary Spraker.
After sinking $17 million of her own money into the Dispatch the past three years, Rogoff realized she would need to sell. She approached prospective buyers. Talks began in April with the Binkley family.
“We talked off and on, hotter sometimes then colder until last week,” Ryan Binkley said in court.
The Binkley family made an offer of $1 to buy the paper back in June. “That was our initial offer until we could do our due diligence on the value (of the Dispatch),” Binkley said.
Rogoff turned the offer down, however, and went on to pursue other buyers.
William Morris III, the owner of the national Morris Communications newspaper group, responded to her offer to sell the paper by considering several possibilities: a joint operating agreement of the commercial printing plant or an outright purchase. (Morris Communications owns the Alaska Journal of Commerce).
“Then Morris announced the sell of some of his own newspapers,” Rogoff said, referring to the sale of the Peninsula Clarion, the Juneau Empire and the Homer News to GateHouse Media among 11 total the company sold in a deal announced Aug. 9.
“I had conversations with other business leaders that were very specific but ultimately didn’t come to an agreement,” Rogoff said.
She also consulted with a national investment firm in New York. But when GCI took legal action on Aug. 11 to evict her from the Northway Drive building, “I could no longer engage them,” she said.
The Binkley family didn’t hear from Rogoff again until Thursday evening, Aug. 10.
“When I spoke to her on Thursday night by phone, she said she was going into bankruptcy protection,” Binkley said. “We responded that perhaps this was an opportunity for an outright sale. I found out later that (employees of the Dispatch) had been telling one another (Friday) to ‘save today’s paper because there’s not going to be another one printed.’”
Rogoff attorney Cabot Christiansen asked Binkley if, as he digs deeper in the financials, he “understands you are undertaking risks that you don’t even know you are taking?”
Binkley said that has been the case since he came on board this weekend. To help protect the family investment, Binkley said he brought in Jason Evans, who owns four rural newspapers and is president of Rural Energy Enterprises and Financial Inc., a business-consulting firm.
Evans’ expertise had helped him conduct due diligence on the Fairbanks Daily News-Miner when the Binkley family had considered purchasing it a few years ago, before it was sold to the nonprofit Snedden Foundation.
Binkley also brought in Jerry Grilly, the former publisher of the Anchorage Daily News who is most recently retired as president and chief operating officer of the Denver Post.
When Rogoff attorney Cabot Christianson asked what does “good faith” mean to him, Binkley responded, “It means treating people fairly and honestly. The people who work for the paper. The creditors, the debtor and any other buyer who comes forward and should be treated fairly.”
The U.S. Trustee, a Department of Justice official assigned by the court, had raised a concern prior to this hearing that Binkley needed to show “good faith” in its efforts.
The concern was that the Binkleys could cut off funding at its “sole discretion” and this could chill prospects for a potential purchase of the debtor’s assets, Trustee Gail Geiger wrote in a motion to Spraker on Aug. 16.
The questions posed for Binkley sought to answer those concerns for the Trustee.
Another factor Spraker and attorneys sought to understand is the actual value of the ADN, because Rogoff is selling it for $1 million, which, if this goes through, will only pay off the $1 million loan proposed by the Binkely Co.
Rogoff said there is no value outside the present use of assets, such as the printing press that remains locked up in the design of the Northway Drive iconic Anchorage Daily News building.
“There is no market value other than as scrap metal,” Rogoff said, though she admitted this information came only from informal appraisals, not an expert.
A Goss Urbanite is now sitting idle at the Arctic Boulevard warehouse — a second giant press meant to turn out large circulations of daily print runs that has never been turned on after problems with the installation and Rogoff’s failure to pay several contractors who worked on the Arctic Boulevard building.
According to Rogoff’s filings, she paid a total of $1.8 million for the press, the transportation and the installation of the Urbanite.
There is another $12.3 million in intangible assets, she said, though did not go into detail.
Naomi Klouda can be reached at email@example.com