By Sean Emery and Jonathan Lansner / Staff Writers
Nov. 4, 2015 – Updated 8:11 p.m.
The owner of the Los Angeles Times made a surprise offer Wednesday to lend $3 million to the owner of The Orange County Register and The Press-Enterprise in what may be a precursor to a bid to buy the two newspapers out of Freedom Communications’ bankruptcy.
Tribune Publishing, owner of the Times and the San Diego Union-Tribune, proposed the loan during a hearing in U.S. Bankruptcy Court in Santa Ana, saying the company would give Freedom $3 million, interest-free, for day-to-day operations. The offer is contingent on Tribune being first to be repaid in any bankruptcy resolution, and its $3 million “refundable deposit” would count against any bid it may make for Freedom assets in the bankruptcy.
Tribune attorney Jeremy Rosenthal declined to comment on whether the loan was an indication of Tribune’s willingness to bid for Freedom’s newspapers.
But Bill Lobel, Freedom’s attorney, said Wednesday he expects Tribune to be a bidder in a bankruptcy court auction for Freedom’s assets – two newspapers and real estate surrounding the news organization’s operations.
Freedom declared bankruptcy on Sunday after losing more than $40 million in two years during the company’s rapid expansion under former CEO Aaron Kushner. It is Freedom’s second bankruptcy in six years. Freedom’s lawyers made their first court appearance Wednesday to get the case moving forward.
“This will be an involved process, and we will do everything we can to support the court,” Freedom CEO and Publisher Rich Mirman said.
Freedom’s bankruptcy plan is to sell the Register and Press-Enterprise in a court-supervised auction. Mirman is leading a group of local investors who plan to bid for the two papers. The future of Freedom and its two newspapers will rest with bankruptcy court.
Freedom’s own plan also includes a $3 million loan, from business lender Silver Point Capital, already owed $19 million by Freedom. Attorney Lobel said that if Tribune is serious about the loan, the company likely will accept the offer due to significant savings vs. Silver Point’s loan.
Tribune is looking to build a regional newspaper empire that could overcome industry challenges through cost-cutting consolidation. The publisher bought the San Diego paper last year.
Newspaper analyst Ken Doctor was not surprised by Tribune’s actions on Wednesday, saying the Chicago-based company has large business needs to fill the hole in its regional consolidation strategy.
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