Local paper publisher likely to suspend dividends, begin sale of its properties soon.
Gatehouse Media (NYSE: GHS, Stock Forum) may be becoming a more solid short by the day, even though it’s dropped 8% on Friday to a new 52-week low of $2.79. That is
an extraordinary drop from a period high of $19.60. The company's yield is now 27%.
With $1.3 billion in debt and shrinking operating income, the dividend is almost certainly going to be reduced or eliminated. That will kill the main reason for owning that shares. It also looks more and more likely that the company will have to auction off properties to pay down debt.
With newspaper values dropping, even after the sale of all its operations, the lenders could end up with less than $1 on $1. Common shareholders would be wiped out. Newspaper chains McClatchy (NYSE: MNI, Stock Forum) and Lee Enterprises (NYSE: LEE, Stock Forum) may be facing the same fate.
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