Dueling investors seek to auction off newspapers

Posted: January 05, 2014

TWO INVESTORS in the company that owns the Inquirer, the Daily News and Philly.com have asked different judges to approve competing plans to auction the media properties.

Lewis Katz, one of five investors in Interstate General Media Holdings, filed a petition Thursday in Philadelphia Common Pleas Court to dissolve the company.

George Norcross III, an investor at odds with Katz for months, filed his own petition yesterday in Chancery Court of Delaware, the state where the company was incorporated in 2012.

Katz's proposal would put the company up for public auction; Norcross seeks a private auction open only to current investors.

Norcross owns nearly 53 percent of the company and is aligned with investors Bill Hankowsky and Joe Buckelew, who own a combined 5 percent.

Katz owns about 26.2 percent and is aligned with investor H.F. "Gerry" Lenfest, who owns about 16.4 percent of the company.

The Norcross faction, in a news release yesterday, said that it had made six proposals in the last 10 months to settle the dispute, all rejected by Katz.

The release included a letter to Katz detailing a Dec. 13 proposal from Norcross for an "intra-member auction, in a blitz format, with each bidder making a $4 million security deposit and bids escalating in $1 million increments."

The Norcross faction warned in a letter to all company employees yesterday that Katz's petition "risks bankruptcy and the loss of jobs," leaving no other option than to seek a private auction.

Katz's attorney, Richard Sprague, issued a statement calling those claims "spin" that "has no validity." Sprague said Katz and Lenfest are committed to bidding in the auction, "securing the highest value for the company."

A spokeswoman for Katz said she did not have a copy of his petition to provide. The petition is not listed on the Common Pleas docket, and the court was closed due to yesterday's snowstorm.

Norcross' petition, provided to reporters yesterday, said "dissolution is warranted for the purposes of breaking the deadlock" between himself and Katz.

Norcross and Katz serve as a two-man management committee and must jointly agree on major business decisions. They have clashed publicly about the employment of Bill Marimow, the Inquirer's editor, and of Bob Hall, publisher of both papers.

A Common Pleas judge in November issued a preliminary injunction, granting Katz's request to have Marimow reinstated as editor after Hall fired him in October. The judge already had rejected Katz's request to remove Hall as publisher.

Norcross filed an appeal Nov. 26 to the Pennsylvania Superior Court, seeking to overturn Marimow's reinstatement. The court on Dec. 6 denied his request for an expedited appeal and asked for more information about the Common Pleas Court action.

On Twitter: @ChrisBrennanDN

Blog: ph.ly/PhillyClout.com

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