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Gatehouse Media, owner of Wellsville paper, files for bankruptcy

GateHouse Media, which owns more than 400 community newspapers around the country, has filed for Chapter 11 bankruptcy protection in Delaware.

Friday’s filing comes after the Fairport, N.Y.-based company announced earlier this month that it would file a prepackaged bankruptcy plan in order to restructure $1.2 billion in debt.

Gatehouse owns the Wellsville Daily Reporter and 45 other publications in New York, from shoppers and weekly publications to daily newspapers, including the Utica Observer Dispatch.

Under the plan, Newcastle Investment Corp., which owns 52 percent of GateHouse’s outstanding secured debt, will combine GateHouse’s media holdings with a batch of Dow Jones Local Media publications it recently bought from News Corp.

Newcastle will then issue stock in a new publicly traded holding company called New Media Investment Group. Holders of GateHouse secured debt could take stock in the new company or cash at 40 cents on the dollar.

“We have complied with and are current with all our obligations,” Chief Executive Officer Michael Reed said in a statement Friday. “With the challenges facing our industry and the impending maturity of our secured debt next year, we needed to be proactive in exploring options to restructure our debt, recapitalize and position ourselves for future growth.”

The prepackaged restructuring plan hinges on the combination of GateHouse with assets of Dow Jones Local Media Group, which Newcastle bought from News Corp. this month for $87 million.

Newcastle has made “two investments in high-yielding local media companies that will be combined and spun into a new company,” Wesley Edens, co-chairman of Fortress, said on a conference call Sept. 4, the same day Newcastle announced the deal for Dow Jones Local.