The U.S. Bankruptcy Court Central District of California gave Freedom Communications Inc. the green light Monday to auction its assets on March 16.
The Chicago-based Tribune Publishing Co., owner of the Los Angeles Times and San Diego Union-Tribune, told federal bankruptcy Judge Mark Wallace it’s “very interested” in becoming a “stalking horse” bidder and making the initial offer for all of Freedom’s assets, “including the Santa Ana real estate … the Orange County Register and the Press-Enterprise in Riverside,” according to one of its attorneys, Jeremy Rosenthal.
Rosenthal also said Tribune has “real concerns” about an asset category listed as “other” on a standard employee benefits status form Freedom filed for 2014 with the U.S. Department of Labor. It shows a $45 million increase in asset value to $75 million, even though “there were no contributions to the pensions, and no other asset categories were reduced.”
“We are optimistic that ultimately we’ll be able to come to evaluation of these assets, and if we can assume the pension liabilities we would do so in the manner that we did when Tribune Publishing purchased the San Diego Union-Tribune,” he said.
Missed plan contributions to the Retirement Plan of Freedom Communications Inc. totaled about $15.5 million as of Sept. 15, according to Pension Benefit Guaranty Corp. The plan in December had about 5,300 participants and $287.3 million in assets, according to the U.S. Department of Labor.
Freedom filed for Chapter 11 bankruptcy on Nov. 1 and said Chief Executive Rich Mirman and Chairman Eric Spitz will join Santa Ana real estate developer Mike Harrah in trying to buy the media company in the auction. The bid will include a “cash component, assumption of liabilities and the retention of the employee pension program,” according to Freedom.
MediaNews Group in Denver is seeking to be designated a potential bidder, according to court documents filed last week. An additional 17 entities have signed nondisclosure agreements and may bid for a portion of assets, said Freedom’s attorney, William Lobel.
Freedom will try to aggregate the bids for individual assets—such as printing presses or intellectual property— and see if they add up to more than a single bid for the entire asset pool, said Alan Friedman, Freedom’s other attorney.
With a potential bid of $75 million to $80 million, “everyone gets paid in full,” including unsecured creditors, providing the bidder assumes pension plan liabilities, Friedman said, adding that “that would be a great result and I think it’s not unreasonable.”
Freedom got $4.5 million last month from Greenwich, Conn.-based hedge fund Silver Point Finance LLC to operate its business during bankruptcy proceedings. Silver Point and Pension Benefit Guaranty Corp. are Freedom’s two primary pre-petition secured creditors.