A stock with huge potential. I don't like the management team, but these stations are in fantastic markets. A decent management team would improve these stations substantially. MEG doesn't have a debt problem it has a high interest rate problem. Part of this problem will be fixed when they refinance the bonds early next year. The debt that Buffett owns is callable, unfortunatley it's callable at 114. My advice to management is suck it up, take it out, and do a Secured Bank Deal at 5% or lower. Now that they have shed the newspapers the credit markets are open to them. This would dramatically increase the free cash flow profile of the company, and the stock would rocket upwards. These are simple transactions that would create substantial shareholder value. The thing I like about the stock is the low share count, any small increase in value means a big movement in share price. Other names in this sector have taken off, this should too, especially if management does some simple things. $20 is not out of the question in a couple of years.
Just in case you haven't noticed the interest is tied directly to the debt (which far exceeds MEG's ability to repay). Without a major Buffett "bailout" eventually this deck of cards has no other future but to fail. These problems are also tied to the fact that, (yes you are correct) Poor management.
They can reduce the interest whenever they want. On the bonds they will wait until February to do so because that is when they are callable, in todays credit marktes they can probably do an unsecured bond at roughly 7%, saving $12m or so (can't remember the coupon off the top of my head, think it's 10 3/4 but might be higher). Those savings go right to the bottom line. They can also do bank debt as well, probably somewhere in the 5% range. Management should have never taken the Buffet deal, they should have sold him the papers, but the financing and warrants was terrible, they under estimated how bad the credit markets hates the newspaper business, once they got rid of those they could have got much better fianncing terms, but they never came to the market. Credit people where shocked they got what they got for the newspapers. There best bet now is bite the bullet and takeout out Buffets notes at 114 and do a bank deal. It's painful yes, but you save an additional $15m+ in interest savings, so have to do it.
Equity people don't understand the credit markets, if they did, they would be much better stock pickers.