News giant faces bankruptcy

... and in financial difficulty

The troubled financial news agency, Bridge Information Systems, stands on the verge of bankruptcy as one of its creditors breaks ranks.

The decision by the creditor, Highland Capital Management, to press harder for recouping $26m in debts is jeopardising a plan to inject $100m into ailing news giant Bridge Information Systems.

Bridge's main backer, the venture capital firm Welsh, Carson, Anderson & Stowe, has expressed its frustration at the move by Highland Capital.

Bridge, which claims to be the largest financial information provider in the United States, and to rank number two in the world, has struggled to repay a bank loan, which is known as senior debt.

James Dondero, president of Highland, said through a spokeswoman that "good-faith negotiations have broken down, and we felt creditors' interests were best served by an immediate filing."

In a written statement, Welsh Carson responded that it was "truly unfortunate that the unilateral action of a single creditor, representing less than 8% of the senior debt, has disrupted this process" of reorganisation.

Bridge has been negotiating a rescue plan with Welsh Carson, which owns about 40% of the company. On the cards is a widescale operational shake-up.

Bridge now has 20 days to respond to the bankruptcy filing.

A Bridge spokesman said it was not yet clear whether the company would seek to have the petition dismissed or converted into a voluntary bankruptcy filing.

Wide-ranging implications

Bridge has admitted that it is already considering filing for voluntary bankruptcy in an effort to win time to implement the restructuring.

And the agency has hired consultancy PricewaterhouseCoopers to help it evaluate alternative strategies.

Failure to resolve Bridge's financial crisis could, besides threatening the jobs of the firm's 5,000 staff, trigger huge payouts by media giant Dow Jones, publisher of the Wall Street Journal.

Dow Jones, which sold bond data service Telerate to Bridge in return for an equity stake, is reported to have underwritten the agency by $250m.

A week ago Dow Jones wrote off its Bridge holding, citing the agency's financial difficulties.

Rapid expansion

Bridge was formed in St Louis in 1974 by five entrepreneurs to fill a gap in the provision of real-time financial data.

But it expanded rapidly after being bought in 1995 by Welsh Carson, its major shareholder. The venture capital company is currently considering whether to offer Bridge a fresh injection of new cash.

Welsh Carson has injected about $700m in the company to date.

During the expansion, Bridge swallowed seven data and technology firms, including a division of Knight Ridder which boasted offices in 100 locations.

The announcement comes in a period of rationalisation for the media sector which, driven by the development of the internet, grew rapidly in the late 1990s, but is being forced to grapple with the prospect of slower advertising growth this year.

Besides last month's AOL Time Warner mega-merger, media organisations including News Corporation and the New York Times have announced cutbacks.

Financial news website TheStreet.com in November pulled the plug on its UK arm.