201 N. Harrison St. Mary JunckDavenport, IA 52801 Chairman, President and Chief Executive Officerwww.lee.net (563) 383-2100December 2, 2011Dear Lee Stockholders and Employees:There is welcome news for all of us who have a stake in Lee. The terms are in place for the completion of a comprehensive refinancing of Lee's debt.We have achieved agreements with an overwhelming majority of our creditors to extend our existing loan agreements on reasonable terms that preserve stockholders' ownership interests in the company with only 13% dilution.As we previously noted as a possibility, implementation will require a favorable, voluntary, prepackaged Chapter 11 process to bind the remaining minority of non-consenting lenders to the terms of the agreements. While such a filing falls under bankruptcy laws, in our case it differs significantly from most such filings because it preserves interests of stockholders and all other parties. The process will simply provide a favorable legal framework for implementing the agreements.The court process is expected to take 60 days or less. In the meantime and throughout the process, we expect there will be no change in our business. There will be no impact on employees, customers, vendors, contractors, contracts, company operations or corporate governance. We expect Lee stock will continue to be traded on the New York Stock Exchange. I am enclosing our news release with additional details.Although the refinancing will require Lee to pay higher interest rates, it and our strong cash flow will keep Lee on solid financial footing as we continue reshaping our company for long-term growth by expanding our digital platforms, building audiences, driving sales and improving our balance sheet.As I hope you noticed in our most recent earnings release, Lee has continued to outperform the industry in multiple measures, most notably in digital advertising growth and audience growth. As I also hope you noted in our recent President's Awards announcements, our publishers, editors, management teams and employees throughout our company have demonstrated outstanding journalism, innovation and spirit. All of this underscores our excitement and confidence as we enter 2012.With deep appreciation for your continuing support,Mary JunckChairman, President and Chief Executive OfficerKEY POINTS ABOUT LEE REFINANCING1. Lee Enterprises has reached agreements to enable refinancing all of our debt.This is good news for employees and stockholders. The terms are reasonable and will keep Lee on solid financial footing. Stockholders' equity interests are preserved; we will be issuing new shares equivalent to a 13% ownership in the company. The agreements will extend maturities to at least December 2015 and provide better terms than those contemplated earlier in the year.2. Implementation requires a favorable, voluntary, pre-packaged Chapter 11 filing.a. An overwhelming majority of creditors have agreed to the terms of the new agreements. A small minority has not agreed to the new terms, however, which will require the transaction to be completed in court through a favorable pre-packaged Chapter 11 filing.b. A pre-packaged Chapter 11 filing is a well-accepted legal mechanism to bind minority nonconsenting lenders to terms that are agreed upon in advance by a sufficient majority.c. While such a filing falls under bankruptcy laws, in our case it differs significantly from most such filings because it preserves interests of stockholders and all other parties. The process simply provides a legal framework to implement the agreement quickly and without disruption to our business.d. In comparison, some Chapter 11 filings by other publishing companies were not prepackaged agreements, leaving settlements to be fought over in court, sometimes taking years. Even so, all continue to operate today.e. In our case, the court process is expected to be clean and quick, lasting 60 days or less.3. We expect the court process will have no effect on our business.a. There will be no impact on employees, 401(k) accounts, other benefits or labor contracts.b. There will be no impact on readers, advertisers or other customers.c. There will be no impact on vendors or contractors.d. There will be no impact on company operations.e. There will be no impact on corporate governance, the board of directors or management.f. Lee stock will continue to be traded on the New York Stock Exchange.4. This is a good deal for all Lee stakeholders.a. In addition to preserving stockholder equity, it keeps the company intact, requiring no sales of assets.b. It removes a key element of uncertainty that has affected investor sentiment.c. It underscores the strong future we and our lenders see for our company.QUICK SUMMARY• This is good news for our company and everyone who deals with it.• Nearly 95% of our lenders support the new terms. Because a few have held out, a benign court process is necessary. This is totally unlike filings by other newspaper companies because nobody is harmed in any way.• There is no impact on employees, customers, contractors or company operations.• Meanwhile: We continue to be, by far, the leading provider of local news and information, and a major platform for advertising, here and across Lee.
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