Clinton, Conn. – Dec. 21, 2009 – Heartland Publications, LLC, which operates 50 paid-circulation newspapers and numerous free or controlled distribution products in nine states, today announced it has reached agreement with the majority of its secured first-lien lenders, led by GE Capital as agent, on a financial restructuring that will reduce the company’s debt by more than half and create a new capital structure for the company.

The financial recapitalization will be completed under Chapter 11 of the U.S. Bankruptcy Code. Petitions were filed today with the U.S. Bankruptcy Court for the District of Delaware. The company plans to file shortly its pre-negotiated Plan of Reorganization and Disclosure Statement which outline how the debt will be restructured. The company anticipates that its financial reorganization will be completed by early spring.

The company’s publications will continue to operate without interruption, and all advertising and circulation agreements will continue as before. Heartland has sufficient funds and positive cash flow to pay its ongoing expenses for the foreseeable future.

“We have built Heartland Publications into one of the best-performing newspaper companies in the country. And we have made great strides to reduce costs as we made investments into online and other new products and revenue streams,” stated Michael C. Bush, president and chief executive officer. “The only problem we have not been able to fix is our balance sheet, which was not predicated on either a severe recession or substantial reduction in newspaper valuations. With the support of our senior lenders, we have voluntarily entered Chapter 11 as the most expeditious way to achieve the kind of balance sheet we will need for future growth. Once we have successfully delevered the company, we will seek new opportunities to grow Heartland in current and new markets.”

Mr. Bush noted further: “We are asking the Court to approve immediately the continuation of all employee and customer programs and certain key vendor initiatives. Most important, we will continue to participate in and serve our communities as we have in the past. Our readers, advertisers, and other business associates will see no change in our day-to-day operations.”



Under the company’s pre-negotiated Plan of Reorganization, which will be filed in the next week, $70 million of existing first-lien debt would be exchanged into two term loans of $60 million and $10 million, respectively, plus an additional $2 million revolving credit facility. In addition, the first-lien lenders would be entitled to approximately 90% of the equity in the reorganized company before dilution for certain warrants and other equity instruments contemplated for other stakeholders. Holders of second-lien claims would receive no distribution if they reject the Plan.

The Plan also calls for the full satisfaction of general unsecured claims.

Mr. Bush credited the company’s nearly 800 full-time and part-time employees “who have worked so hard to provide newspapers that meet the needs of their reading audiences. We can take pride in consistently offering the best in news, advertising, and entertainment for our local communities. There are no operational changes, including layoffs, planned as a result of the filing. We will continue to manage the bottom line carefully as well as continue our ongoing program to consolidate back-office functions into our operating hubs. When the restructuring is completed in a few months, we will have the right foundation for our company’s future growth.”

The company is being advised by Young, Conaway, Stargatt and Taylor LLP as legal counsel; and Duff & Phelps Securities, LLC as financial advisors.

From its headquarters in Clinton, Conn., the company operates 50 paid-circulation newspapers and numerous free or controlled distribution products in Georgia, Kentucky, North and South Carolina, Ohio, Oklahoma, Tennessee, Virginia and West Virginia. The company reaches more than 250,000 print subscribers each month and many others via interactive websites.

Additional information about the company’s restructuring may be found online at http://chapter11.epiqsystems.com/heartlandpublications or by calling (866) 222-1116 or, internationally, (646) 282-2400. Information about the company and its publications can be found at www.heartlandpublications.com.

Contact: The Abernathy MacGregor Group

Rivian Bell or Sydney Rosencranz

rlb@abmac.com; spr@abmac.com

(213) 630-6550; (888) 477-4319 (24/7)