Newspaper executives are forced to come up with increasingly clever maneuvers to stave off bankruptcy. Lee Enterprises, which owns the St. Louis Post-Dispatch, my daytime employer, the Arizona Daily Star, and several small-town papers will reportedly resort to selling off its debt as junk bonds in order to prevent vulture investors from swooping in and picking at its carcass.

The Wall Street Journal reports Lee will sell high-yield bonds that allow it to pay of its creditors, which have been buying Lee’s loans while expecting the company to default. By doing so, Lee will deny the vultures a chance to take over the company and reap higher returns. Such a fate has befallen the Tribune Co., MediaNews Group and the Journal Register Co., the WSJ reports.

The story quotes an unnamed fund manager who owns Lee loans as saying “Everybody and their brother in the distressed market would like to see Lee default.”

A fund manager reportedly called Lee’s bankers and berated them for spoiling his plans.

Lee is a juicy target for distressed-debt fund managers because it still generates a healthy cash flow despite its heavy debt, much of which came from a 2005 acquisition of Pulitzer, Inc., which added the Post-Dispatch and Star to its ranks.

A Lee spokesman declined comment to the Journal.

A Pulitzer Prize-Worthy Tactic To Escape Default [The Wall Street Journal]

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