On January 29, 2020, Lee Enterprises, Incorporated, a Delaware corporation (“Lee”) entered into an Asset and Stock Purchase Agreement (“Purchase Agreement”) with Berkshire Hathaway Inc., a Delaware
corporation (“Berkshire”) and BH Media Group, Inc., a Delaware corporation (“BH Media”). Subject to the terms and conditions of the Purchase Agreement, Lee has agreed to purchase certain assets and assume certain liabilities of BH Media’s newspapers
and related community publications business (“BH Media Newspaper Business”), excluding real estate and fixtures such as production equipment, for a purchase price of $130 million, and purchase all of the issued and outstanding capital stock of The
Buffalo News, Inc., a Delaware corporation (“Buffalo News”) for a purchase price of $10 million (collectively, the “Transactions”). Since July 2, 2018, Lee has managed the BH Newspaper Business pursuant a Management Agreement between BH Media and Lee
dated June 26, 2018 (“Management Agreement”).
The Purchase Agreement contains customary representations, covenants and warranties, including covenants that BH Media and Buffalo News will conduct their respective businesses, and Lee will perform
its services under the Management Agreement, in the ordinary course consistent with past practice during the period between the execution of the Purchase Agreement and the consummation of the Transactions. The closing of the Transactions is subject
to customary closing conditions, including the expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the closing of the financing of the Transactions and refinancing of Lee’s existing
credit facilities under the Credit Agreement, as described below (“Debt Financing”) and the execution and delivery of specified ancillary agreements.
The ancillary agreements include a lease agreement between BH Media, as Landlord, and Lee, as Tenant, providing for the leasing of 68 properties and related fixtures (including production equipment)
used in the BH Media Newspaper Business (“Lease”). The Lease will be signed and commence upon closing of the Transactions. The Lease requires Lee to pay annual rent of $8 million, payable in equal monthly payments, as well as all operating costs
relating to the properties (including maintenance, repairs, property taxes and insurance). Rent payments will be subject to a Rent Credit (as defined in the Lease) for any leased real estate sold by BH Media during the term of the Lease.
The Purchase Agreement also contains certain rights to terminate the Purchase Agreement prior to the Closing, including by mutual consent or by either party under certain circumstances, including if
the closing of the Transactions has not occurred on or before April 30, 2020.
In connection with the Purchase Agreement, Lee entered into a Credit Agreement dated as of January 29, 2020, with BH Finance, LLC, a Nebraska limited liability company (“BH Finance”), as lender
(“Credit Agreement”), pursuant to which BH Finance will provide a secured 25-year term loan in an aggregate principal amount not to exceed the sum of the aggregate purchase price under the Purchase Agreement plus Lee’s outstanding indebtedness as of
the closing date and incidental fees and expenses related to the Debt Financing, subject to the satisfaction of certain customary closing conditions, including the simultaneous closing of the Transactions and the Debt Financing. The Debt Financing
under the Credit Agreement will bear interest at a per annum rate equal to 9.00%, payable monthly. Principal reductions will be required periodically in the amount equal to the Company’s excess cash flow (as defined in the Credit Agreement) for
each fiscal quarter beginning with the period ending June 28, 2020, and for the proceeds from the sale of assets as they may be received from time to time. Substantially all of the proceeds of the Debt Financing will be used to finance the
Transactions; refinance Lee’s existing indebtedness, including payment in full of its outstanding Senior Secured Notes, second lien loans and revolving loan indebtedness; and provide working capital to Lee in lieu of a revolving credit facility.
The Credit Agreement also contains certain customary representations and warranties, certain affirmative and negative covenants and certain conditions, including restrictions on incurring additional
indebtedness, creating certain liens, making certain investments or acquisitions, issuing dividends, repurchasing shares of stock of the Company and certain other capital transactions.
Certain existing and future direct and indirect material domestic subsidiaries of Lee are guarantors of Lee’s obligations under the Credit Agreement.
The foregoing summary of the Purchase Agreement, Lease and Credit Agreement (collectively, the “Agreements”) does not purport to be complete and is qualified in its entirety by reference to the
complete terms of the Purchase Agreement, filed as Exhibit 10.1 hereto and incorporated herein by reference, the Credit Agreement, filed as Exhibit 10.2 hereto and incorporated herein by reference, and the form of Lease Agreement, filed as Exhibit
10.3 hereto and incorporated herein by reference.
The Agreements have been included as exhibits to provide investors with information regarding the terms of each. The Agreements are not intended to provide any other factual information about Lee,
Berkshire or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Agreements were made only for purposes of the Agreements and as of specific dates; were made solely for the benefit of the
parties to the Agreements; may be subject to limitations agreed upon the by parties, including being qualified by confidential disclosures; may not have been intended to be statements of fact, but rather, as a method of allocating contractual risk
and governing the contractual rights and relationships of investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of Lee, BH
Media or Buffalo News or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Agreements, which subsequent
information may or may not be fully reflected in Lee’s public disclosures.