Buffett and Berkshire Hathaway Go Deeper into Media General

Media General Inc. (NYSE: MEG) has done well since Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-B) (NYSE: BRK-A) invested heavily into the company by purchasing the majority of the news and communication outfits newspapers earlier this year. Now comes news that Berkshire Hathaway has exercised its warrants to purchase 4,646,220 shares of the company’s Class A common stock. After the warrants exercise, Media General has some 27,918,339 common shares outstanding and Berkshire Hathaway’s ownership now represents roughly 16.6% of the total outstanding shares.

We would make note that the exercise was a bit of a no-brainer as the exercise price for these warrants was set at $0.01 per share. These warrants were issued as part of a new credit agreement that Media General and Berkshire Hathaway completed on May 24, 2012. Under the new credit agreement, Berkshire Hathaway provided Media General with a $400 million term loan that matures in May 2020 and a $45 million revolving credit line.

So far we are seeing very little action in Media General shares as it is worth only about $146 million, according to the new number of common shares outstanding. We would note that Yahoo! Finance only lists its market cap as just over $118 million.

Shares are down about 1.4% at $5.00 against a 52-week range of $1.14 to $6.84.

JON C. OGG