Star Tribune seeks to avoid labor contracts

Posted by Simon Day on March 12, 2009 at 8:31 AM

In an attempt to lower costs, the Star Tribune on Wednesday sought court permission to renege on one of its labour contracts, reports The Associated Press.

On Wednesday the newspaper requested that Judge Robert Drain cancel the contract after failed negotiations with the pressmen union. The paper said it needed US$3.5 million in wage concessions from the pressmen union as part of $20 million in cuts across the newspaper's 10 labour unions.

"We're at a critical stage," Chief Financial Officer David Montgomery said, according to the AP. "We need to save every dollar we can possibly save to get us through this period and get us to the other side of the recession."

As of December, the newspaper owes $667 million and has $492 million in assets and $27 million in cash. The Star Tribune sought Chapter 11 bankruptcy protection In January while it tries to reorganise its debt in an attempt to keep the paper open. The newspaper is carrying heavy debt from its purchase of Avista Capital Partners LP, from McClatchy Co. in March 2007.

The cancellation of the contract would affect 116 union employees.

As of December, the newspaper owes $667 million and has $492 million in assets and $27 million in cash. Judge Drain did not state when a decision would be reached, the AP reported.