Posted by chicagomedia.org on September 08, 2009 at 20:51:16:
Chicago investor group bids to buy Sun-Times Media
September 8, 2009
By CHRIS FUSCO | Sun-Times Staff Reporter
A small number of Chicago businessmen led by Mesirow Financial's James C. Tyree submitted a bid today to buy the Chicago Sun-Times and its sister publications, the company that owns the newspapers announced.
Tyree's group, called STMG Holdings LLC, is willing to acquire Sun-Times Media Group in a deal worth about $25 million, according to Sun-Times Media, which filed for Chapter 11 bankruptcy protection in March.
The deal--subject to court approval--would include up to $5 million in cash. The Tyree group also would take on about $20 million in liabilities.
In addition, Tyree and his fellow investors are pledging to pump tens of millions of dollars into the company to try to shepherd it back to profitability, Sun-Times Media Group officials said.
The Tyree group's offer--submitted this afternoon in U.S. Bankruptcy Court--marks a significant step in keeping Chicago a two-newspaper town and preserving dozens of suburban dailies and weeklies.
The sale, however, would be contingent upon labor unions throughout the company agreeing to continue 15 percent wage-and-benefit cuts negotiated after the company's March 31 bankruptcy filing. Those cuts--many of which were set to expire in the event of a sale--would need to continue into the foreseeable future for Tyree and his partners to buy the company, Sun-Times Media Group officials said.
Also, by law, a bankruptcy judge must entertain competing offers for the company. If other bidders emerge, it would be up to current ownership to select a top bidder and ask a bankruptcy judge to approve the sale. That process could take between several days and several weeks, depending on the pace set by the judge.
Since filing for bankruptcy, about a half-dozen potential ownership groups--including Tyree's--have visited the company's downtown offices and spoken to top management, said Jeremy L. Halbreich, Sun-Times Media Group's interim CEO and board chairman. He described the Tyree group as "far and away the most attractive."
Halbreich would not go into specifics about Tyree's co-investors, other than to say Tyree is leading "a small group of well-known Chicago-based individuals" who want to continue turning around a company that was once bleeding cash at the rate of $1.5 million a week. That number is now down to between $200,000 and $300,000 a week, Halbreich said.
Eliminating those losses altogether, Halbreich said, is something that is "very achievable" and "something we believe we can accomplish very quickly."
Tyree--whose group reportedly includes Blackhawks owner Rocky Wirtz--declined to comment.
Halbreich said Tyree--a 51-year-old native Chicagoan with a reputation for turning around companies--has been impressed with the company's staff, from upper-level management to reporters and photographers.
"If you go back five months ago, we said we were going to do two things," Halbreich said. "We were going to restructure the business so as to make this a self-sustaining enterprise in today's media world. ... And we were going to use this period of time to attract new investors to bring capital to the business so we could grow and innovate into the future. And that's what we've done.
"Those are plans we shared with the new buyer group. That's part of what they're buying into," Halbreich continued. "It's basically the buyer group coming in not only with the significant financial resources, but also saying to management and to the entire staff across all our newspapers, 'We like what we see. We like what you're doing. Let's continue the process. Let's get this operation to a true self-sustaining business, and we will grow it from there together.' "
A sale to the Tyree group would address a $600-million-plus debt Sun-Times Media Group owes to the Internal Revenue Service--a tax bill that stems from the days when now-imprisoned international businessman Conrad Black ran the company.
The deal would effectively split the company in two, with the IRS getting the final proceeds from the proposed sale. The Tyree group would end up owning the Sun-Times, its sister publications and their Web sites. A second company that contains Sun-Times Media Group's IRS debt would remain and eventually be liquidated.
There are no plans to eliminate any of the company's publications, Halbreich said, though he did not rule out future job cuts.
"The new buyer group is challenging the management team to continue to rigorously review the business and get it to a break-even basis as quickly as possible," Halbreich said.