In another sign of distress in region’s newspaper industry, the owner of 11 dailies and weeklies in Northeastern Minnesota and Northwest Wisconsin confirmed it expects to be in technical default on loan covenants related to their 2007 purchase.

Macquarie Media Group (ASX:MCG), based in Sydney, Australia, acquired the Superior Publishing newspapers in February 2007 with its purchase of their parent, Dallas, TX-based American Consolidated Media. In preliminary financial statements filed with the Australia Stock Exchange, Macquarie disclosed its American Consolidated Media unit is current on its loans, but expects to be in default on debt coverage ratios stipulated in its loan agreements, as of Sept. 30. The public disclosure came in an Oct. 13 news release by the stock exchange.

American Consolidated Media’s properties include Minnesota newspapers in Virginia, Hibbing, and Grand Rapids; and Wisconsin newspapers in Ashland, Hayward, Spooner, Park Falls and Phillips.

The news release stated the Macquarie subsidiary’s third quarter operating earnings were down 21 percent from the year-earlier period, but reflected improvement from results during the first half of 2009. Despite that drop, the unit is producing sufficient cash flow to service its $133.7 million debt load. Macquarie is keeping the U.S. subsidiary’s lenders apprised, but does not intend to infuse American Consolidated Media with additional capital, the release stated.

Lenders have the right to accelerate repayment and potentially take ownership of American Consolidated Media if it defaults on its debt coverage covenants.

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