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Bankruptcy Sought by GateHouse Media

WILMINGTON, Del. (CN) - GateHouse Media listed more than $1.2 billion of debt to seek bankruptcy protection in what the local newspaper giant calls a strategic restructuring move.

The filing came Friday after its creditors approved a plan for the community news publisher to merge with Newcastle Investment Corp., an affiliate of GateHouse's parent company Fortress Investment Group. Earlier that month Newcastle bought Dow Jones Local Media Group for $87 million.

GateHouse CEO Michael Reed insisted that the bankruptcy filing did not reflect any operational difficulties for the publisher, which operates in 330 markets across 21 states.

"We have complied with and are current with all our obligations," he said in a statement, "but with the challenges facing our industry and the impending maturity of our secured debt next year, we needed to be proactive in exploring options to restructure our debt, recapitalize, and position ourselves for future growth. The prepackaged plan proposes a 'balance-sheet restructuring,' by which GateHouse will emerge from bankruptcy with much less debt on its balance sheet, but with its business operations completely intact."

Newcastle meanwhile noted last month that Dow Jones Local Media Group owns 33 local publications, including eight daily and 15 weekly newspapers, in seven states. It said some of these publications are at least 75 years old.

GateHouse's largest unsecured creditor is Kruger with $1.2 million owed. The publisher also owes low six-figure sums to the Boston Globe, Gannett CNY Product Facility, Publishers Circulation and Southern Lithoplate.

In addition to Houlihan Lokey Capital acting as its financial adviser, GateHouse is represented by Young Conaway Stargatt & Taylor.

Other debtors that filed with GateHouse Media include Copley Ohio Newspapers, ENHE Acquisitio, Enterprise NewsMedia Holding, the Mineral Daily News Tribune, News Leader and the Peoria Journal Star.

Fortress Investment Group has owned GateHouse since 2005.

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