According to a report in the New York Post the venerable New York Times is much worse off financially than anyone predicted.
As The New York Times Co. tries to bask in the glory of having bagged five Pulitzers, the company is facing a cash crunch that could put it on the path toward insolvency.
According to its first-quarter earnings report, the Times said it had cash and cash equivalents totaling $294 million.
However, $260 million of that is earmarked to pay off debt that matures in March 2010, effectively leaving the company with $34 million.
That’s a particularly precarious position to be in, given the Gray Lady posted a wider-than-expected, first-quarter loss of $74.5 million amid worsening advertising declines, and is scrambling to raise cash as it labors under a $1.3 billion debt load.
On top of that, the company finds itself on the hook for a $625 million shortfall in its pension and benefit obligations, and could be forced to spend millions to shore it up starting next year.
To be sure, the company made clear that it has room under its credit facility to pay off $44.5 million in debt due at the end of the year.
But the Times is having a rough time raising cash, and has few other options.
The Times will likely need the cash on hand just to cover additional losses the paper will sustain this year leaving it in danger of not having enough money on hand to pay back the debt that is due in March. Under normal circumstances this wouldn’t be such a major concern as the paper could roll the debt forward with a new loan or credit agreement and continue to operate. But now lenders are expecting debt to be paid back on time and aren’t extending credit even to profitable businesses without stiff terms so what can the Times hope for considering that they continue to lose money?
While it is too early to write the obituary for the Times, the next twelve months will be crucial in determining the company’s future. For the Gray Lady I only see gray skies ahead.