Star Tribune's money situation worsens

No news is good news lately when the Star Tribune writes a story about its own company. Yesterday we reported that the Star Tribune is being sued for sexual harassment. Today Star Tribune company chairman Chris Harte announced that the newspaper stopped making payments on its debt and could be considering a bankruptcy filing in the future. The paper skipped a $9 million quarterly payment on its $432 million debt, Harte said.

According to a Harte's memo sent to employees this morning:

We have decided not to make our quarterly interest payments, due late yesterday afternoon, to both our first and second-lien lenders.

As you may recall, we did not pay our second-lien lenders last quarter, which put us officially in payment default on June 30.

We continue to have active discussions with our lenders about our financial situation and are working with them, with the help of the Blackstone Group, on restructuring the company’s debt.

The decision not to make the quarterly payments is driven by our need to conserve cash resources and maximize our liquidity while we work through this restructuring process.

In the story published on the Star Tribune site Harte said, "All options, including a bankruptcy filing, are on the table," but "nothing is imminent." MinnPost's David Brauer says this is the first time Harte hasn't denied the possibility of bankruptcy.

The troubles are also gaining national attention, published this morning in Gawker. The blog suggests all Americans learn from the Star Tribune and save money by not making payments on debt. How clever!

If you ask us, this sounds like denial. Or a slow process of wading into what is to come. Maybe the paper should go back to the days of high ethical standards that Gov. Sarah Palin misses so dearly. Nevermind, we probably shouldn't take journalism business advice from someone who can't seem to name a single newspaper or magazine she reads: