Newspaper union: $77M too high a price for IGM auction

Posted: April 26, 2014

WILMINGTON - The largest union at The Inquirer will not bid against its owners in an auction for control of the parent company if the bidding starts at $77 million, a lawyer for the union said Thursday.

At the start of a hearing that could shape the sale of the company, lawyer Lisa Lori told a Delaware judge there was "no way" the Newspaper Guild or its investing partners were willing to match the $77 million that rival co-owners of Interstate General Media Holdings L.L.C. have pledged as a starting bid.

Donald F. Parsons Jr., Delaware Court of Chancery vice chancellor, then heard about 90 minutes of closing arguments from lawyers for IGM co-owners Lewis Katz, H.F. "Gerry" Lenfest, and George E. Norcross III over the format for sale of the company.

Katz and Lenfest prefer a public auction with single sealed bids. Norcross and co-owners Joseph Buckelew and William P. Hankowsky prefer a private auction among current owners. Last week, Norcross testified that the minimum bid for a private auction should be $77 million to cover the owners' investment and current debts. Katz testified that he would bid $77 million in a public auction.

Parsons had let the guild, which represents about 480 IGM employees, intervene in the case and potentially join the bidding. Previously, the Guild identified two potential partners: philanthropist Raymond Perelman and the Communications Workers of America.

However, Perelman said twice to reporters that he would not bid $77 million for the company. That also was too much money for the CWA, Lori said Thursday.

Guild local president Howard Gensler and executive director Bill Ross sent an e-mail to members Thursday night, saying "it is not in the best interests of our members or any of the company's employees for anyone to again overpay for IGM." Unionized and independent employees made more than $20 million in concessions less than 15 months ago, they wrote, and the idea that current owners need to be made whole in an auction format "is insulting to everyone who works here." If the minimum bid were lower, "we would hope to be back in."

Earlier at the hearing, Norcross lawyer Robert Heim told the judge that a private auction would maximize value for IGM, in part, because costs for investment bankers and virtual data rooms for third-party investors to examine financial information could be "entirely avoided."

Katz's and Lenfest's lawyer C.J. Seitz said likely outside bidders have been waiting for Parsons' decision to know whether they would have a chance to bid. "That's why we need to go with the judge's inclination, which is to have a canvass" of the market, Seitz said afterward.

The judge can select either side's auction plan or craft one himself for the sale of IGM, which owns The Inquirer, Philadelphia Daily News, and three websites. Parsons did not say when he will issue his decision.

Katz and Norcross, the managing directors of IGM, have agreed to dissolve it because of irreconcilable differences.

Parsons also urged the two sides to settle their differences over the fate of Inquirer editor William K. Marimow.

Marimow was abruptly fired in October by publisher Robert F. Hall, a move that Norcross supported and Katz opposed. A Philadelphia judge reinstated the editor in November, but denied Katz's request to have Hall dismissed.

Marimow's contract is due to expire on Wednesday, and Seitz said that Norcross still wanted to "kick him out at the end of the month."

Parsons declined to weigh in but told the lawyers: "I will be very unhappy if I'm forced to rule on whether the fellow is out on the 30th or the 6th or the 5th."

Norcross declined later to comment on the matter. Lenfest and Katz said they wanted Marimow to stay, with Katz suggesting that another legal battle would occur if Marimow were again ousted.


dsell@phillynews.com

215-854-4506

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