Star Tribune skips $9M debt payment

All options were on the table, including a bankruptcy filing, chairman and publisher Christopher Harte told the newspaper, according to a story published Wednesday on its Web site.

"We are looking at an incredibly wide range of options, but nothing's imminent," said Harte.

Harte said the newspaper is profitable, but it's carrying $432 million in debt. Avista Capital Partners, which bought the state's largest newspaper in March 2007, doesn't disclose revenue and expense figures for the Star Tribune.

In a memo to employees obtained by online newspaper MinnPost, Harte reassured employees that the paper is "a fundamentally sound franchise."

A newspaper spokesman didn't immediately return a call from The Associated Press.

The newspaper defaulted on its loan agreements earlier this year, and stopped making payments to junior lenders in June.

The Star Tribune isn't the only paper struggling. Last week, The McClatchy Co., which owns papers across the country, negotiated concessions with its lenders to gain flexibility on its $1.175 billion debt to help the company avoid a potential default. McClatchy agreed to put up more collateral and pay higher interest rates.

Ken Doctor, a media analyst for the research firm Outsell Inc., said the Star Tribune is suffering the same big revenue declines seen throughout the industry due to advertising's migration to the Web and the economic slowdown.

Doctor said the newspaper took on significant debt when it was purchased. As cash flow has declined, so has its ability to service that debt.