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Court Approves Freedom Communication Reorganization

The U.S. Bankruptcy Court approved a revised reorganization plan for the bankrupt parent company of the Orange County Register on Tuesday.

The plan is a result of a compromise by the major lenders of Irvine-based Freedom Communications Inc. and its smaller unsecured creditors, who had been seeking to submit their own rival reorganization plan.

Freedom, which runs the Register, other papers and TV stations, filed for bankruptcy in September.

The new plan now calls for turning over 100% of the company to secured lenders, leaving the founding Hoiles family and two private equity firms with no stakes.

Freedom’s original plan called for giving descendants of founder Raymond Cyrus “R.C.” Hoiles and private equity investors a combined 2% stake with an option to buy up to 10% of the company.

Like the original plan, the latest package would cut Freedom’s debt from nearly $1 billion to $325 million.

Most of the debt was incurred in a 2004 buyout by private equity firms Blackstone Group LP and Providence Equity Partners LLC that kept family members in control.

The company is looking to emerge from Chapter 11 by the end of March.

Upon exiting Chapter 11, Freedom will receive a $25 million revolving credit facility from General Electric Co.’s GE Capital.

As part of the reorganization, Freedom named its new board of directors last month.

The directors will serve with Burl Osborne, Freedom’s interim chief executive. They include James D. Dunning Jr., former president of Rolling Stones magazine; Donald C. Grenesko, former chief financial officer for Chicago-based Tribune Co.; Ross Levinsohn, managing director of Palo Alto-based private equity firm Fuse Capital; Sean P. Moriarty, former chief executive of Ticketmaster Entertainment Inc.; and Mitchell Stern, former chief executive of El Segundo-based DirecTV Inc.

The court also approved the sale of Freedom’s Phoenix-area operations to 1013 Communications LLC, part of Colorado-based Thirteenth Street Media. The sale is expected to close by the end of March for the newspapers in the Phoenix area including East Valley Tribune.

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