• by Erik Sass  @eriksass1, January 2, 2009

The New Year is delivering more bad news for newspapers, beginning with the possibility that Lee Enterprises could be de-listed from the New York Stock Exchange.

The company's average share value has fallen below $1 per share over the last month, and its market capitalization has fallen to less then $25 million--two minimum requirements for listing on the exchange. From a peak of $14.91, Lee's stock has traded around an average of $0.50 in recent weeks, and its market capitalization is around $16 million.

Lee Enterprises has mid-sized papers in 53 markets throughout the U.S., including the St. Louis Post-Dispatch, a flagship, as well as the Arizona Daily Star (Tucson), Billings Gazette(Montana) and Wisconsin State Journal (Madison, Wis.), among others.

Lee informed shareholders that it received a letter from NYSE warning of possible de-listing on Dec. 30, but also said it has a plan to increase share value and market capitalization to restore compliance. It said it would tell NYSE the details of this plan by Friday, Jan. 9; the NYSE allows a six-month grace period for noncompliant companies to shore up their stock prices, but this grace period can be canceled if market capitalization also remains too low.

The threat of de-listing comes as the beleaguered publisher struggles to avoid defaulting on its debt--including a $306 million payment set to come due in April, according to the St. Louis Post-Dispatch.

Indeed, per Lee's loan covenants, the company already technically defaulted on two loans when auditor KPMG said Lee's status as a "going concern" is in jeopardy, given the 8% decline in revenue and a huge loss of $880 million in 2008.

Lee isn't the only publicly traded newspaper publisher to face the prospect of de-listing in recent months. In April, the Journal Register Co. had its stock, trading at four cents a share, de-listed from the New York Stock Exchange. Like Lee, the Journal Register Co.'s woes are symptomatic of the newspaper industry overall. The stock price plunged, lenders closed their wallets, and declining ad revenues made it impossible to service large debts.