SWING VOTE
Freedom Heiresses In Legal Maneuver to Control Key Voting Block
By RICK REIFF
Three heiresses of the Freedom Communications Inc. empire have gone to court to stop a trustee, who oversees Freedom stock for a sister-in-law and themselves, from selling those shares or taking part in a shareholder vote on whether to sell the company.
The motion for a temporary restraining order against the trustee, retired Los Angeles Superior Court Judge Paul Egly, was filed in Orange County Superior Court late last week.
It could add another twist to efforts by the divided family to sell or to recapitalize the Irvine-based media company, which publishes the Orange County Register.
Freedom’s outside directors now are reviewing at least eight proposals from major media companies and private equity firms to either buy or invest in the company, which owns 28 dailies, 37 weekly papers and eight TV stations around the country.
The company is believed to be worth a ballpark $2 billion.
Among the bidders is a family faction led by Freedom chairman and former Register publisher David Threshie, with financial backing from New York-based Blackstone Group LP and Providence Equity Partners Inc. of Rhode Island.
That offer is presumed to peg Freedom’s shares below the prices being offered by the big media bidders, which include Gannett Co. and Dean Singleton’s MediaNews Group Inc.
But the Threshie group’s offer appeals to those shareholders who want the family to remain involved in the company, which was founded by libertarian Raymond Cyrus “R.C.” Hoiles.
It is the shareholders of that bidding faction,sisters Judith Hoiles Threshie (David Threshie’s wife), Patricia Hoiles Wallace and Mary Elizabeth “Betty” Hoiles Bassett,who are at legal odds with their sister-in-law, Patricia G. Hoiles.
Patricia G. Hoiles, described as being in her 70s, is the childless widow of James Howard Hoiles, who died in 1964.
James and his three sisters are the children of the late Clarence Hoiles, one of three children of founder R.C. Hoiles.
Betty Bassett lives in Plano, Texas. Her other two sisters and Patricia G. Hoiles live in Orange County.
At issue are Freedom shares held in a trust of which Patricia G. Hoiles is the “income” beneficiary and her three sister-in-laws are the “remainder” beneficiaries.
Trustee Egly, a Laguna Beach resident and founding dean of the University of LaVerne’s College of Law, distributes all of the trust’s dividend income, about $500,000 a year, to Patricia G. Hoiles.
When she dies, the Freedom shares and any other assets in the trust are set to go to her three sister-in-laws or their estates.
The arrangement stems from a 1980s settlement of a legal battle between Patricia and her sister-in-laws over James Howard Hoiles’ stake in Freedom.
The shares in the trust make up only about 4% of Freedom’s total. But they could be critical because the family is closely divided over the company’s future.
The Threshie group has said that it has more than 40% of all Freedom shares pledged to its buyout offer.
Cousins Tim Hoiles and David Hardie are believed to have a similar percentage of shares in support of their attempt to sell the company to the highest bidder.
Sources said the three sisters fear that trustee Egly, who has a fiduciary duty to them as well as to Patricia G. Hoiles, will back attempts to sell the shares to the highest bidder in order to maximize the trust’s value.
None of the parties directly involved in the legal action were available for comment.
Tim Hoiles’ lawyer, Joseph M. Alioto, called the sisters’ action “desperate” and predicted it would fail.
“This is a furtherance of efforts that we consider to be unlawful to keep certain shareholders hostage and force them to sell out at less than a competitive price,” Alioto said.
One source said Patricia G. Hoiles and her sister-in-laws have been at odds for years: “Not talk to each other? They won’t even get in the same room.”
