Group said to have sole right to try for PMN

Posted: March 07, 2012

A group headed by businessman Lewis Katz and philanthropist H.F. "Gerry" Lenfest has entered into an exclusive agreement to negotiate for the purchase of The Inquirer, the Daily News, and Philly.com, according to sources close to the process.

Lenfest, in an interview Wednesday, said he was asked by former Gov. Ed Rendell to take over as chairman of a group of political and corporate leaders assembled to bid on Philadelphia Media Network Inc. (PMN).

The group also now apparently includes Raymond G. Perelman, the Philadelphia philanthropist whose individual bid to buy the media outlets last month was rebuffed. His associates said Wednesday that he has signed a non-disclosure agreement, indicating he is part of an active bidding group.

Two years ago, Perelman and Lenfest were part of a group that bid unsuccessfully on the company.

An exclusivity agreement between PMN's owners and potential buyers is a strong indicator that a sale will occur, but it is no guarantee that a deal will be consummated. PMN is currently owned by a consortium of hedge funds and investment banks that brought the website and newspapers out of bankruptcy in 2010.

Unlike the 2010 sale, which was conducted in public view by U.S. Bankruptcy Court, the current process has been shrouded in secrecy. PMN spokesman Mark Block declined to comment Wednesday, as did a spokesman for Evercore Partners Inc., the New York investment bank managing the sale.

Two groups submitted offers for the company last week. According to sources, the Katz group's bid was favored over that of businessman Jeffrey Perelman.

Jeffrey Perelman is one of Raymond Perelman's sons, but they have had a litigious public relationship.

Terms of the two offers were not disclosed. The current composition of the group of potential buyers appears to be in flux.

Lenfest said in an interview Wednesday that Rendell had invited him to join as chairman, leaving Rendell's status unclear.

"I'm sorry to be so vague," said Lenfest, 81, who built his fortune in cable television and now is one of the region's most prominent philanthropists.

"I'm not trying to avoid you," he said. "I've not seen any written agreement that specifies all these terms' so I'm being cautious about any of this until I see it in writing."

He referred questions to Rendell. Rendell declined to comment.

It is unclear what Rendell's role will be going forward since he had said he was not investing equity into the group and had earlier said he expected to be chairman.

Lenfest is a former chairman of the Philadelphia Museum of Art, and his patronage has included gifts to the Curtis Institute and to the Pennsylvania Academy of the Fine Arts, which last year inaugurated Lenfest Plaza, a public space for performance and sculpture at Broad and Cherry Streets.

Katz is a lawyer who made his fortune from parking garages and real estate, and is a former owner of the New Jersey Nets. He funded construction of the Pennsylvania State University law school building that bears his name.

Other members of the group Rendell assembled included South Jersey insurance executive and Democratic leader George E. Norcross III; Liberty Property Trust CEO William P. Hankowsky; Krishna P. "Kris" Singh, president and CEO of Holtec International in Marlton, and Comcast-Spectacor chairman Edward M. Snider.

But the current status of the group was unclear last night. Snider, reached by telephone, declined to comment.

After the sales process became public in early February, two other investor groups sought to join the bidding but were turned away.

A group organized by developer Bart Blatstein announced its interest in bidding in early February, only to be told by PMN's owners that it would not be permitted to do so. Raymond Perelman also wanted to bid, and he complained in a Feb. 8 letter addressed to PMN that he was "surprised and dismayed" at being excluded.

Typically, in an auction-like sale, the seller chooses a preferred bidder, and the two sides enter into an exclusive period of negotiation to hammer out the details of a sale agreement. That period could last 30 to 90 days.

A sale would be the fourth change of ownership for the media outlets since its longtime owner, Knight Ridder Inc., was acquired in 2006 by McClatchy Co.

McClatchy turned around and sold Philadelphia Newspapers Inc. for $515 million to a group headed by advertising executive Brian P. Tierney.

Tierney's company declared bankruptcy in 2009. Lenfest and Raymond Perelman were members of a group of investors Tierney assembled in 2010 that bid unsuccessfully on the newspapers during the bankruptcy court auction.

The successful bidders - the current owners - included hedge funds Alden Global Capital and Angelo, Gordon & Co., which had acquired discounted debt from the company's creditors. They paid $139 million for the properties.

PMN is shrinking its staff by 37 positions, or about 10 percent of the combined unionized workforce of 360 journalists at its two newspapers and the website.


Contact Andrew Maykuth at 215-854-2947, @Maykuth on Twitter or amaykuth@phillynews.com

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