LEE ENTERPRISES, INCORPORATED (NYSE:LEE) Files An 8-K Entry into a Material Definitive AgreementItem 1.01.
Entry into a Material Definitive Agreement.
LEE ENTERPRISES, INCORPORATED (NYSE:LEE) Files An 8-K Entry into a Material Definitive Agreement
On June 26, 2018, Lee Enterprises, Incorporated (the "Company") has joined with BH Media Group, Inc ("BH Media"), in an agreement for Lee to manage Berkshire Hathaway's newspaper and digital operations in 30 markets ("BH Media"), beginning July 2, 2018 (the "Management Agreement"). Certain terms of the Management Agreement are as follows:
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The Company will, subject to terms of the Management Agreement, operate BH Media consistent with how it manages its own newspaper and digital operations. Certain management decisions will require approval by Berkshire Hathaway. |
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The Management Agreement commences on July 2, 2018 and extends for a term of five years. The Management Agreement may be extended thereafter for successive one-year terms on such terms as may be mutually agreed to by the Company and Berkshire Hathaway. |
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The Management Agreement provides for the Company to be paid a fixed annual fee of $5 million, payable quarterly in arrears. |
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The Management Agreement also provides for the Company to earn a variable fee based on a percentage of annual EBITDA of BH Media over $34 million as follows: |
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For the twelve months ending June 2019, the variable fee percentage is 33.3% |
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For the twelve months ending June 2020, the variable fee percentage is 33.3% |
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For the twelve months ending June 2021, the variable fee percentage is 50% |
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For the twelve months ending June 2022, the variable fee percentage is 50% |
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For the twelve months ending June 2023, the variable fee percentage is 50% |
The variable fee is payable annually in arrears.
The foregoing summary description of the Management Agreement does not purport to be complete and is qualified in its entirety by reference to the Management Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On June 26, 2018, the Company issued a press release relating to the Management Agreement described in Item 1.01 above. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated herein by reference. Other items disclosed include:
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Based on its present projections and assumptions, the Company expects that it will receive approximately $50 million in total fees from the Management Agreement over the course of the five year agreement. |
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As of the end of the June quarter, debt totaled $499.8 million, a reduction of $68.7 million over the last twelve months. |
FORWARD-LOOKING STATEMENTS — The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This filing contains information that may be deemed forward-looking that is based largely on our current expectations, and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties, which in some instances are beyond our control, are:
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Our ability to generate cash flows and maintain liquidity sufficient to service our debt; |
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Our ability to comply with the financial covenants in our credit facilities; |
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Our ability to refinance our debt as it comes due; |
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Our ability to manage declining print revenue; |
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That the warrants issued in our refinancing will not be exercised; |
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The impact and duration of adverse conditions in certain aspects of the economy affecting our business; |
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Changes in advertising and subscription demand; |
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Changes in technology that impact our ability to deliver digital advertising; |
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Potential changes in newsprint, other commodities and energy costs; |
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Legislative and regulatory rulings, including new tax legislation; |
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Our ability to achieve planned expense reductions; |
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Our ability to maintain employee and customer relationships; |
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Our ability to manage increased capital costs; |
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Our ability to maintain our listing status on the NYSE; |
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Other risks detailed from time to time in our publicly filed documents. |
Any statements that are not statements of historical fact (including statements containing the words "may", "will", "would", "could", "believes", "expects", "anticipates", "intends", "plans", "projects", "considers" and similar expressions) generally should be considered forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this release. We do not undertake to publicly update or revise our forward-looking statements, except as required by law.
Item 9.01. Financial Statements and Exhibits.
LEE ENTERPRISES, INC ExhibitEX-10.1 2 managementag.htm MANAGEMENT AGREEMENT Exhibit 10.1 – Management Agreement between Lee Enterprises,…To view the full exhibit click here
About LEE ENTERPRISES, INCORPORATED (NYSE:LEE)
Lee Enterprises, Incorporated is a provider of local news and information, and a platform for print and digital advertising. The Company’s products included 46 daily and 34 Sunday newspapers, 300 weekly newspapers, and classified and niche publications, as of September 25, 2016. The Company also provides a range of digital products, including video, digital couponing, behavioral targeting, audience retargeting, banner advertisements and social networking. It provides digital marketing services to small and midsized businesses (SMBs), including search engine marketing (SEM), social media, audience extension, business profiles, and Website hosting and design. It offers small business solutions, including search engine optimization (SEO), local online marketing, social media marketing, video advertising and Website design. The markets it caters to are located primarily in the Midwest, Mountain West and West regions of the United States.
