Columbian talking with its creditors

Scott Campbell, Publisher of The Columbian newspaper. (Troy Wayrynen/The Columbian)

The Columbian Publishing Co. continues to negotiate with its creditors this month in advance of a Chapter 11 bankruptcy court date on July 1.

The publishing company's reorganization bankruptcy case appears to hold no surprises.

Publisher Scott Campbell expects his business to emerge from Chapter 11 in four to five months, once debt owed to primary lender Bank of America, is resolved.

The publishing company owns The Columbian newspaper, the weekly Camas Post-Record newspaper and operates the Web site columbian.com. The company sought court protection from creditors on May 1, reporting an estimated $17 million in debt.

Since then, the company has filed disclosure statements with U.S. Bankruptcy Court in Tacoma, met with creditors and compiled other information as required by the court, said Doug Ness, Columbian chief financial officer.

The next step in the bankruptcy process is to file a debt restructuring plan, due to the court on July 1.

"We're working to produce that in the next few weeks," Ness said. "We hope to have that by July 1. Once our plan is ratified by the court, we can come out of Chapter 11."

Ness emphasized that The Columbian is cash-flow-positive and operationally profitable.

"We plan to remain profitable," Ness said. "We're basing our business model going forward on realistic projections and solid assumptions about our market and business."

At a recent meeting of the Vancouver Rotary Club, Campbell reflected on his industry's situation.

"The fact is that Chapter 11 for us was necessary in spite of all the restructuring we'd done in the past 18 months to get back to a profitable situation," Campbell told his Rotary audience. "We as an industry are facing extraordinary challenges. This is the biggest change for print media since the invention of the radio … this is a shift from the Industrial Age to the Information Age."

Thomas Stilley, a Portland attorney with Sussman Shank LLP, who is representing Bank of America, described the bankruptcy process as in "the preliminary stages and going fine, so far."

"The Columbian is in the process of submitting a new (operating) budget for the next 13 weeks or more," Stilley said. "And we expect them to file a debt restructuring plan fairly quickly." The bank is allowing The Columbian to use its cash collateral with the bank, in line with terms of the bankruptcy filing.

Matthew Todd, an executive with Entek Air Conditioning in Vancouver, is serving on a court-appointed creditors' committee. The Columbian owes his company $26,000 for equipment and repair work on its heating and cooling system. "This is not a make or break amount," Todd said. "We expect that out of this process, we will get something. Sometimes it's 100 percent, but usually something less. My guess is it will be slow, maybe six months to work it out."

The Columbian daily newspaper is delivered throughout Southwest Washington as far north as Woodland and east into the Columbia River Gorge. The company employs 260 full- and part-time workers and generates an annual payroll of $10.5 million, not including benefits.

At its May 1 filing, the publishing company in court records reported 2007 gross revenue of $33.2 million; 2008 revenue of $29.7 million and $6.13 million in the first four months of this year through April 30.

"What we've experienced is 10 to 15 times worse than anything we anticipated in advertising revenue declines," said Campbell, whose family has owned the newspaper since 1921. "In two years, we've seen a 40 percent ad sales decline. To cut costs, we've gone through three rounds of layoffs, frozen pay, reduced production costs, pared back (newspaper) content and moved out of our new office building back to our old building on West Eighth Street."

Campbell said once negotiations are completed with Bank of America to restructure debt related to construction of the new building at 415 W. Sixth St., he sees the newspaper on an even keel. He acknowledged that the print newspaper still generates 95 percent of his company's revenue, even through Internet traffic to the newspaper's Web site continues to grow.

"We as an industry are still trying to monetize the Web," he said. "It's still in its infancy."

Campbell said conditions remain challenging and he did not rule out pay cuts or other measures to further reduce operating costs.

"Moving into our new building (in January 2008) was like packing and going on a really bad vacation," he said. "It's great to be back in the old building."