Reuters logo
Corrected: Lenders again win auction of Philadelphia newspapers
September 23, 2010 / 6:43 PM / 7 years ago

Corrected: Lenders again win auction of Philadelphia newspapers

(Corrects typographical error in headline to newspapers)

By Jon Hurdle

PHILADELPHIA (Reuters) - Lenders for a second time won a bankruptcy court auction for the publisher of The Philadelphia Inquirer and Daily News, topping a group led by investor Ronald Perelman’s father in the latest twist in the bitterly contested bankruptcy.

The lenders, a group which includes hedge fund Angelo, Gordon & Co and a unit of Credit Suisse Group AG, submitted a winning bid of $105 million.

The auction repeated one held in a New York law office in April that the lenders won with a $139 million bid. However, the lenders failed to reach an agreement with the Teamsters union, a condition of their April bid, and the bankruptcy court last week ordered a new auction, this time held in court.

The lenders topped a competing group that includes Raymond Perelman, the 93-year-old father of corporate raider Ronald Perelman, which bid $85 million.

Existing labor agreements with the company’s workforce will be honored under the terms of the bid but the Teamsters must still reach a deal with management, said Jay Devine, a spokesman for the publisher.

Larry McMichael, an attorney with Dilworth Paxson which represents the bankrupt publisher, told the court that the $105 million “is the largest and best bid, and I think concludes the auction.” He urged a prompt exit from bankruptcy.

Bankruptcy Judge Stephen Raslavich said after about four hours of negotiations that both sides had shared goals of continuing the publication of Philadelphia’s major newspapers and preserving jobs.

The judge thanked Perelman for his role in helping to forge the agreement. “I think that your involvement did help push matters along,” Raslavich told Perelman, who was in the court.

The company entered bankruptcy in February 2009 because of falling advertising revenue and a heavy debt load taken on by investors led by public relations executive Brian Tierney whose group bought the company for $515 million in 2006.

The company’s bankruptcy became mired in legal fights over ads in the papers blasting the lenders, accusations that meetings were secretly recorded and a precedent-setting maneuver that forced the lenders to bid cash.

Gregory Milmoe, an attorney for Perelman’s group, said the agreement was likely to ensure the survival of the newspapers.

“We are hopeful that the papers will continue, that the parties will be able to close the transaction, and that the papers will keep publishing,” he said outside the court.

Other newspaper companies also have struggled in the recession as advertising falls and readership declines.

Tribune Co, the publisher of the Chicago Tribune and Los Angeles Times, has been in bankruptcy since December 2008, a year after real estate developer Sam Zell acquired it through an $8 billion leveraged buyout.

Reporting by Jon Hurdle. Editing by Robert MacMillan

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below