A family equity company based in Florida is supporting a recapitalization plan for the Davenport-based newspaper publisher Lee Enterprises.
The Hoffmann Family of Companies recently announced it has submitted a letter to Lee Enterprises’ Board of Directors expressing interest in supporting a potential recapitalization of Lee.
In the Quad Cities region, Lee is the publisher of the Quad-City Times, The Dispatch and Rock Island Argus and Muscatine Journal newspapers. It publishes more than 350 weekly and specialty publications serving 73 markets in 26 U.S. states.
The proposal outlines a $25 million investment in the newly issued common equity at a price of $2 per share, alongside a $25 million fully backstopped rights offering to existing shareholders at the same price. This structure implies a pre-money enterprise valuation of about $462 million, based on Lee’s current debt obligations and outstanding shares.
“HF Companies believes this proposal offers a fair, transparent and constructive path toward recapitalizing Lee Enterprises – enhancing long-term financial stability and supporting continued investment in the company’s digital transformation strategy,” according to a statement from Hoffmann.
The statement adds: “The proposal assumes cooperation from both BH Finance, Lee’s senior lender, and the company’s board and management. HF Companies believes this transaction provides all stakeholders – including existing stakeholders – with a meaningful opportunity to participate in a value-preserving solution.”
The recapitalization plan is the latest move by Hoffmann centering on Lee Enterprises. Last December, the company announced it had increased its ownership of the newspaper publisher’s stock.
“We have and will continue to purchase shares in the company as market conditions present themselves,” David Hoffmann, Hoffmann’s chairman, said in a news release issued Dec. 13.
In March, Mr. Hoffmann said he wanted to buy the newspaper publisher.
Facing interest from Hoffmann seeking to acquire majority ownership, the Lee Enterprises Board of Directors voted in March to extend a previous shareholders rights plan, the media company announced one day before that plan was set to expire.
The Davenport-based newspaper and digital media chain said in a Wednesday, March 26, news release that the one-year extension – which runs from March 27, 2025, to March 27, 2026 – was needed following “the unsolicited expression of interest from The Hoffmann Family of Companies … to acquire the Company.”
Such plans often are designed to discourage any one shareholder from acquiring a controlling amount of stock, and to give a company time to consider any offer and determine what actions it might take to maximize shareholder value.
The Hoffmann Family of Companies is a diversified family-owned conglomerate that employs more than 9,000 people at 250 facilities around the world.
