GateHouse Media Inc., which owns more than 400 community newspapers and hundreds of local websites, is restructuring its $1.2 billion debt in a prepackaged chapter 11 filing, The Associated Press reported yesterday. Newcastle Investment Corp., which owns 52 percent of GateHouse's debt, then plans to combine GateHouse's media empire with the 33 Dow Jones Local Media publications that it recently bought from News Corp. for $87 million. Newcastle would then spin off those operations to form a new publicly traded company called New Media. GateHouse became overleveraged during the 2008 financial crisis, but over the past four years has doubled digital revenue and cut $150 million in costs. The prepackaged reorganization already has the support of other creditors, who will have the option to convert their positions to stock in GateHouse or cash at terms of 40 cents on the dollar. Both GateHouse Media and Newcastle Investment are affiliates of Fortress Investment Group LLC, which specializes in buying troubled businesses.
