(cont'd from above)
Estimates say reconstruction will cost the company $250 million, which includes demolition of the burnt rubble of the former facility and building a new facility from scratch. Insurance premiums have also risen dramatically for the company, as insurers consider the newspaper, and it’s primary raw material—news print—a dangerous underwriting risk.
“These damn insurance companies are trying to kill me with their fees,” said MT owner Robert “Bull” Hanover. “Make sure you print that I said ‘damn’ and ‘insurance companies’ in the same sentence.”
Hanover said his premium is being raised by 49%, and his deductible has been hiked nearly as much, and that no insurance company will consider insuring the new building for less. The rise in price is due to the insurance companies’ concerns about shortcuts taken in the construction process, which resulted in the failure of the plant’s sprinkler systems.
The city had awarded The Metrocity Times with a $50 million grant to assist with reconstruction of the printing plant. The grant was part of the city’s economic development plan to revitalize the Southern Docks. The mayor’s office said it is rescinding the grant because the facility it was intended to support does not exist anymore.
With an insurance payoff of just over $150 million, the MT must come up with an extra $100 million to cover construction costs.
At this point, Hanover said he will have difficulty raising those funds.
“It’s hard to come up with $100 million when the banks laugh at you and the mayor’s office pretends you don’t exist,” said Hanover.
The only course of action left to Hanover is to take The Metrocity Times public by selling stock to finance the construction. Hanover said he is working with financial experts on an IPO (Initial Public Offering) within the coming weeks.
Financial expert Cyril McDonough at First National Bank of Metrocity said the MT is going public at a tricky moment in the economy. Newspapers’ low profit margins are a tough sell in a bull market; in a bear market, such as the current one, McDonough said Hanover will have to pray he finds an “angel investor” to take on the majority of the IPO.
Hanover said he recognizes that he has an uphill battle. “Look, even people in the newspaper industry will tell you to get out of it. I know that. There is no point in lying about it. But I am hoping that there are still people out there who value the feel of a newspaper in their hands and being a part of bringing the news to the community.”
The economy may be getting better, but Metrocity business owners are still feeling the ripple effects of the downturn.
After being a staple for ten years in the West End, Momma Jean’s Coffee and Things had to close its doors. Internationally-based clothing store Retro Fix has closed three stores in Metrocity, and more are slated to close in the surrounding suburbs.
People seem more concerned with making ends meet than buying new clothes or eating out. Everyone is feeling the heat. The Metrocity Times is no exception, especially after the recent fire at the newspaper’s printing plant.