NH Business Finance Authority approves $1 million loan to sustain state’s largest newspaper operation

CONCORD, NH – The New Hampshire Business Finance Authority (BFA) approved a $1 million loan to the New Hampshire Union Leader, the state’s largest newspaper, according to a news release issued Tuesday.

The BFA said its board unanimously approved the loan although Vice Chairman Steve Duprey recused himself from the vote.

“This transaction reflects the BFA’s dedication to supporting New Hampshire’s business landscape and our statewide community,” stated James Key-Wallace, Executive Director of the New Hampshire Business Finance Authority. “We’re excited to play a role in helping the Union Leader build a stable foundation for the future, which will not only benefit the publication but also ensure its employees can fully benefit from their hard-earned pensions.”

Publisher Brendan J. McQuaid, in an article published in the newspaper, said the money will strengthen the Union Leader’s long-term finances and provide critical support for the newspaper to fulfill its mission of providing quality journalism for the state.

 “Ensuring the financial stability of our employees, who are essential to the Union Leader’s success, is at the heart of this transaction,” he said.

The requirements of the five-year loan include significant equity and collateral contributions from private investors, with an additional $1 million in equity investment and $750,000 in cash collateral provided to secure the BFA’s financing, according to the news release. This support will help bolster the Union Leader’s financial standing, positioning the newspaper for sustainable success.

The BFA’s financing requires rank-and-file employees to continue to receive 100% of their pensions.   Meanwhile, the executive pension plan participants have agreed to a 65% reduction, reflecting a commitment to prioritizing employee welfare.

“By securing full pension benefits for staff and implementing strategic financial changes, the Union Leader is positioned to continue providing independent, local journalism to New Hampshire long into the future,” McQuaid said in the article.

Among the executives taking that cut are retired publisher Joseph W. McQuaid and John MacKenzie, former vice president of finance.  According to the NH New Guild, McQuaid was receiving $114,000 annually, and MacKenzie, $75,000.  The 65 percent reduction means McQuaid will now receive $40,000 and MacKenzie, $26,250.

The loan will ensure rank-and-file employees receive 100% of their pensions and removes some of the burden of legacy pensions for people who worked in now-defunct departments such as the mail room or press room, according to the Union Leader. Members of the New Hampshire News Guild, including reporters, editors and office employees, have a separate pension plan.

The NH News Guild, which represents about 40 employees including reporters, editors, and advertising and circulation staff, issued a statement saying, “This deal appears to ensure that New Hampshire will continue to benefit from the award-winning journalism, advertising and customer care that our members create on a daily basis. For that, we are gratified. “

However, the union voiced concern that the loan is contingent on $1 million in equity investment.

“We want the Union Leader Corp. and the New Hampshire Business Finance Authority to identify any investors and detail the leadership and decision-making roles the investor(s) will have in the company,” the Guild said in a statement.

The Nackey S. Loeb School of Communications, a nonprofit organization, owns the Union Leader Corporation.

Last June, the newspaper put together a financial package seeking $3 million from private investors, in combinations with the $1 million loan from the BFA to pay off “legacy debt” – retirement and pension plans – and keep it in business.

The NH News Guild, which is in contentious negotiations with the corporation, made that information public last September. At that time, it issued a statement saying that a significant part of the legacy debt is pensions for executives and managers.

“Unlike the Guild pension plan, the company never properly funded pensions for non-union workers, even during prosperous times,” the Guild said in a statement. “Other legacy obligations are employee severance and payments to pension funds of unions that represented workers in disbanded departments such as the distribution center.”

Mark Hayward, guild spokesman, would not disclose who provided the guild with the documents.  He said, however, the Union Leader made a pitch to an investor who made the documents available to a Manchester area businessman whom in turn, gave them to Hayward.  

According to the documents, each year the newspaper pays out $900,000 from its operating budget to service $7,956,000 in legacy debt. That includes the pensions for Joseph W. McQuaid and MacKenzie.

Brendan McQuaid and Joyce Levesque, executive vice president, explained in the documents that $3 million is needed to fund the elimination of its pensions/retirement benefit plans, generate cash and grow the business, along with another $1 million in public funds from the BFA.

“Legacy debts are those promises made to employees via benefit payments mostly paid in retirement,” McQuaid and Levesque said in their June 5, 2024 communication called “Union Leader capital investment introduction.”

The debts, they said, “originated in an era when we were above $50 million in annual revenue and at that size, the debts were relatively small.  These legacy debts are from now frozen pension plans that cannot be easily terminated.  Now that we have stabilized revenues at just over $14 million annually, servicing these debts is a gargantuan task.”

Fifty years ago, the newspaper published a morning and afternoon edition and an edition of the Sunday News.  In the decades since, the paper went to a morning edition only six days a week, along with the Sunday edition; to a Monday-Friday daily edition, eliminating Saturday.  This past year, it began delivering the Sunday on Saturday.

It eliminated its press, outsourcing the printing of the paper; sold its building at 100 William Loeb Drive; and now has offices in the Millyard.  Along the way, staff was reduced and employees’ pay cut. 

“We have significantly reduced staff, outsourced printing and sold our aging building,” McQuaid and Levesque wrote.  “We have also reduced compensation, eliminated pension plans, renegotiated union contracts, and eliminated some printing days to keep our heads above water.”

The result of all the cutbacks is that Guild members went without a pay raise for 15 years, after having their pay significantly cut.

 “We’re barely holding on as middle-class workers,” said Hayward.

He said the union published the information because guild members hadn’t known anything about their employer’s finances in a long time.

“We thought it was important to get this out to them,” he said.

Members, he said in September, are very upset that under the UL’s proposal to investors they don’t see any pay increase for 12 years. 

“We didn’t have any pay raises for the last 15 years,” he said.  “Members received one this year and now will go another 12 years without receiving a pay raise.” 

The employees also had their dental, vision and life insurance benefits eliminated while other benefits were reduced as well.

The company’s projection over the next 12-years indicates salary cuts in the first three years and then stagnated wages for the next nine, according to the guild.

For 2024, the company lost $472,668, according to its profit and loss statement.  

The $4 million is needed to turn things around. 

“The Union Leader cannot survive as a strong, independent, statewide news source without the help of citizens who understand the importance and history of the New Hampshire Union Leader as an independent institution for Granite State news and information.  We know that reducing this legacy debt needs to be done and it is the only way the Union Leader can achieve a solid economic footing for the future.  We have a solid plan and have put the Union Leader on the right path to achieve this plan, we hope you will be able to help,” McQuaid and Levesque wrote in the financial proposal. 

Investors would be repaid over 10 years, at 5 percent interest, with repayment starting in year six.  By the 12^th year, the corporation projects a profit of just over $1 million.

At the time of the June proposal, the Union Leader was in talks with three separate pension plans seeking debt forgiveness of at least 50 percent, or just under $4 million.