Agreement for Sale of Morris Publishing Group, LLC's Athens (Ga.) Banner-Herald News Building.
On December 1, 2011, Morris Publishing Group, LLC ( "Morris Publishing") entered into an Agreement of Purchase and Sale (the "Agreement") with Lulscal, LLC, a Colorado limited liability company ("Buyer"), for the sale of Morris Publishing's newspaper building and real estate located at One Press Place, Athens, Georgia (the "Real Property"). The building is situated on approximately 3.1 acres.
Morris Publishing will continue to publish its newspaper, the Athens Banner-Herald, following the sale.
Under the Agreement, the Buyer will pay Morris Publishing $13,474,500, payable in cash, at closing (the “Purchase Price”). The Purchase Price will be increased by $3,333 per day until closing if Buyer does not complete the purchase by March 1, 2012. The Buyer is required to close on the Real Property no later than 150 days after the execution of the Agreement.
Buyer has broad rights to inspect the Real Property and may terminate the Agreement for any reason within 120 days after the date of the Agreement.
Morris Publishing will have the right to lease back the Real Property through December 31, 2012 and to terminate the Agreement if the terms of a lease are not agreed upon between the parties within 15 days of the date of the Agreement. For an initial rent period through and including the later of (1) 45 days after closing, or (2) March 31, 2012, the rent for the Real Property will be one dollar.
After this initial rent period, Morris Publishing will have the right to rent the Real Property on a month-to-month basis. Morris Publishing may rent the first floor of the news building, constituting 28,204 square feet, at a monthly rental of $42,306 on a triple net basis. In addition, Morris Publishing may rent the industrial space on the ground floor and the metro level, constituting 43,212 square feet, for $28,808 per month on a triple net basis.
Waivers under Working Capital Line of Credit.
On December 7, 2011, Morris Publishing received consents and/or waivers from CB&T, a division of Synovus Bank (the “Bank”), under the Loan and Line of Credit Agreement dated April 26, 2011 (the “Working Capital Facility”), permitting or consenting to:
1. The sale of the Real Property in Athens and the leaseback of such Real Property.
2. The sale and leaseback of Morris Publishing's newspaper building in Conway, Arkansas. Morris intends to sell such property for approximately $665,000.
3. The use of the Net Cash Proceeds (as defined in the Indenture for the New Notes discussed in Item 8.01 of this Form 8-K) from the sale of the Real Property in Athens to prepay any balances under the Working Capital Facility and to repurchase New Notes under the Indenture, without terminating the Working Capital Facility.
4. Morris Publishing's purchase of New Notes (on the open market or otherwise from note holders) so long as the outstanding balance on the Working Capital Facility immediately after the purchase of such New Notes does not exceed $3,000,000.
Morris Publishing also states the following information in this Item 8.01.
If consummated, the sale of the Real Property would constitute an "Asset Sale" as defined in Morris Publishing’s Indenture dated March 1, 2010 (the "Indenture") with respect to its $100 million aggregate principal amount of Floating Rate Secured Notes due 2014 (the “New Notes”). Under the Indenture, Morris Publishing is required to use the “Net Cash Proceeds” (after deducting certain expenses and taxes, as defined in the Indenture) from an Asset Sale to prepay any amounts outstanding under its Working Capital Facility and then to offer to repurchase New Notes from note holders on a pro rata basis at a purchase price of 101% of the face amount of the New Notes repurchased.
The “Net Proceeds Offer” (as defined in the Indenture), must be mailed to holders of the New Notes within 25 days following the “Net Proceeds Offer Trigger Date” (as defined in the Indenture), which is 100 Business Days following receipt of the Net Cash Proceeds. The Indenture requires the repurchase to be consummated within 180 days of receipt of the Net Cash Proceeds from an Asset Sale.
Morris Publishing expects to use the Net Cash Proceeds of the sale of the Real Property to repurchase New Notes in accordance with the Indenture. Management views this sale as an important step in Morris Publishing's efforts to repay and/or refinance all of the indebtedness represented by the New Notes. Morris Publishing will explore refinancing opportunities, subject to market conditions, with hopes to repay and/or refinance this indebtedness in 2012.
On December 7, 2011, Morris Publishing issued a press release discussing the sale of the Athens, Georgia Real Property, a copy of which is furnished as Exhibit 99.1 to this Form 8-K.
