GateHouse Media (GHSE.PK +33.3%) files for Chapter 11 bankruptcy protection; part of a plan in which its lenders - led by Fortress (FIG +0.1%) affiliate Newcastle Investment (NCT +1.2%) - will exchange their claims for new common stock (Newcastle owns 52% of the debt and will get 52% of the new shares).
As part of the plan, Newcastle will turn over to GateHouse recently-acquired Dow Jones Local Media Group, and plans to spin off the unit into a new public company called New Media Investment Group.
Existing GateHouse owners would see their stakes wiped out, but will receive warrants to buy 5% of New Media's stock.
Newcastle Investment (NCT -2.2%) acquires Dow Jones Local Media Group from News Corp. (NWS, NWSA) for $87M.
Local Media operates 33 local publications in 7 states. The business will now be managed by GateHouse Media (GHSE.PK), an affiliate of Fortress Investment (FIG), which is Newcastle's manager.
Newcastle owns about 52% of GateHouse's $1.2B in debt and it and other creditors have agreed on a prepackaged Chapter 11 filing in which Newcastle expects to convert its debt holdings into equity of GateHouse.