We’ve received word from a couple of folks over at Tucson Newspapers that something rather strange is going on.

Here’s what we’ve heard: Star employees, who normally are paid on Friday, got paychecks today–and those paychecks included cash-outs for whatever Lee Enterprises stock the employee had.

What does all this mean? Our best guess–and this is JUST a guess–is that this may be a prelude to a bankruptcy filing by Star parent company Lee Enterprises, which is overleveraged in debt and has been trying to renegotiate the terms of some of that debt.

We’ll keep you posted as we find out more.

This article appears in Feb 12-18, 2009.

7 replies on “Weird Goings-On at ‘Star’ — Are They Bankruptcy Clues?”

  1. Oh Jimmy, sounds like you are right on the money. Lee apparently didn’t make its Friday the 13th “get your financial house in order” deadline.
    This should make the impending closing of the Citizen that much more interesting!

  2. this might have something to do with it… see link for details

    Sinking Lee Share Price Takes Employee Stock Plan Down With It

    Fitz: Like a lot of companies, Lee Enterprises has an employee stock purchase plan (ESPP) that allowed paycheck deductions to buy shares (NYSE: LEE). Yesterday, though, Lee refunded the amounts employees contributed during this ESPP year.

    Lee’s board of directors suspended the plan because the low share price meant there simply wasn’t enough stock to go around.

    Dan Hayes, Lee’s vice president of corporate communications, explains that each year the board sets aside a certain amount of shares for the ESPP. LEE began to sink in the last plan year, so the stock had to be rationed, and payroll deductions returned to employees. For the current plan, the board allocated way more shares — but the stock fell faster, and it was looking like even more deductions would have to be returned.

    “It’s unfair to the employees to keep holding money out of the paycheck, only to give it back,” Hayes said.

    Exactly — that’s what the IRS is for.

    LEE’s share price has languished below $1 a share for weeks now, and the stock has been threatened with de-listing from the Big Board, where it has traded for three decades. Lee is asking shareholders at its annual meeting next month to approve a reverse stock split of between 5 and 10 into 1, which would increase the share price, but not affect its market capitalization which in recent sessions has been below the NYSE minimum.

    In early trading Wednesday, LEE shares were going for 29 cents, up 1 cent on the open.

  6. Sarah Lee might be right about the employee stock plan refunds, but why, pray tell, would they have made payroll 2 days early??
    Inquring minds want to know.
    Dan Hayes is a sleeze.

  7. DAVENPORT, Iowa–(BUSINESS WIRE)–In a comprehensive series of steps to strengthen its financial position during the recession, Lee Enterprises, Incorporated (NYSE: LEE – News), has concluded agreements with existing lenders to refinance $306 million of debt of its subsidiary St. Louis Post-Dispatch LLC (the “Pulitzer Notes”) and restructure future payments under its $1.1 billion bank financing arrangements. Lee also has redeemed the 5 percent interest of its minority partner in St. Louis.

    Lee today repaid $120 million of the principal amount of its $306 million Pulitzer Notes debt due in April 2009 using a portion of its restricted cash, which totaled $129.8 million at Dec. 28, 2008. The remaining debt balance of $186 million has been refinanced by the existing lenders until April 28, 2012. Under the agreement, $9 million of restricted cash was retained to facilitate the liquidity of the operations of Pulitzer Inc., a wholly owned subsidiary of Lee, and its subsidiaries.

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