Philadelphia's two major newspapers may soon go up for auction again after creditors failed to close on their $139 million purchase by Tuesday's deadline.
An afternoon bankruptcy court hearing was scheduled to discuss the status of the company that operates The Philadelphia Inquirer and Philadelphia Daily News.
"The deal did not close. The asset purchase agreement has expired," company lawyer Larry McMichael told The Associated Press after the noon deadline. "Exactly what's going to happen is still
up in the air."
The company nonetheless has enough money to fund normal operations and continue publishing the newspapers until a sale is finalized, he said.
A group of local investors paid $515 million in 2006 to buy the media company, which they dubbed Philadelphia Media Holdings. However, the industry soon soured and they owed creditors nearly
$400 million when they filed for bankruptcy three years later.
Creditors won the marathon April bankruptcy auction, outbidding local philanthropists led by Philadelphia business mogul Raymond Perelman who helped push the price far past expectations.
Perelman, who recently toured the Inquirer newsroom, told the AP on Tuesday that he will "probably" attend the afternoon court hearing. He declined to comment on whether he would mount another
bid if a second auction is held.
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Creditors insisted on signing deals with the company's 15 labor unions before closing the sale, and sought to cut costs by 13 percent across the board. They forged deals with all but one: delivery drivers concerned about the company cutting ties with their Teamsters pension plan.
"There is no reason that the buyers cannot go to closing as scheduled and continue to pay for the existing pension benefits," the union said in a statement Monday, "Local 628 has in fact agreed to the full scope of economic concessions and cost-savings that the buyers wanted down to the penny."
According to McMichael, former Publisher and Chief Executive Officer Brian Tierney will not return to the helm, but would again help recruit potential buyers in the event of a second auction.
"Brian will be actively involved in trying to get bidders to the table. Brian will not be a bidder," McMichael said.
Tierney, who left as CEO in late May, is a former public relations executive who won the support of Teamsters and fought vigorously throughout the bankruptcy to keep the newspapers in local hands.
The creditors' management team, Chief Operating Officer Bob Hall and Publisher Greg Osberg, had warned Monday that the newspapers may be shut down for a time if the drivers hold out. They also
vowed that creditors would again win any future auction. They did not return messages Tuesday morning.
The creditors' group is led by hedge funds Alden Global Capitol, Angelo Gordon & Co. and other financial institutions.
