Freedom Communications turns to $51.8 million Digital First Media bid

By Caroline Salls

Pittsburgh, March 21 – Freedom Communications, Inc.’s assets will be sold to MediaNews Group, Inc., which does business as Digital First Media for $51.8 million, the company said in a court filing less than one week after Tribune Publishing Co. said its Orange County Media, LLC subsidiary was the winning bidder for the assets.

Freedom said in a filing made Saturday in the U.S. Bankruptcy Court for the Central District of California that both Tribune and Digital First Media submitted stalking horse bids for the assets. After negotiations, the company said both parties continued to make demands for stalking horse protections. Tribune withdrew its stalking horse bid on March 8, and a stalking horse agreement was subsequently reached with Digital First.

On March 15, Tribune asked the court to deny payment of bid protections for Digital First. However, that motion was withdrawn on Monday.

Bid history

According to the filing, Tribune and one other party both filed qualified overbids, with Digital First’s bid serving as the stalking horse bid. The third party’s bid was withdrawn.

In evaluating the competing bids at the auction, Freedom said it considered the amount of the competing purchase price, including the liabilities being assumed, the risks and timing associated with closing the competing bid, the terms of the competing purchase agreement, and the ability of the competing bidder to obtain appropriate regulatory approvals, including a notification from the Department of Justice regarding anti-trust concerns about a sale to Tribune.

At the conclusion of the auction, Orange County Media was selected as the successful bidder and Digital First was selected as the back-up bidder.

DOJ steps in

Freedom said it knew before the auction that the DOJ was considering seeking to enjoin Tribune’s ability to close the sale, but the company and the parties with which it consulted believed that they had negotiated with Tribune to mitigate the risk associated with the possible injunction.

“However, when attempting to work through the revisions to the Tribune’s purchase agreement immediately following the auction, it became clear that the Tribune was unwilling to provide to the debtors the protections that the debtors and consultation parties believe they had received during the auction process,” Freedom said.

As a result, the DOJ sought an injunction against Tribune’s closure of the sale on March 17 and sought a temporary restraining order against Tribune. The restraining order was granted on March 18.

After the restraining order was granted, Freedom said Tribune was asked to provide the same protections it was believed had been obtained during the auction, but Tribune refused.

“Given the risks associated the DOJ’s efforts to enjoin the Tribune, and the Tribune’s desire to push that risk entirely onto the debtors, the debtors, following consultation with the consultation parties, determined that the Tribune’s bid was no longer the highest and best bid,” Freedom said.

Based in Santa Ana, Calif., Freedom Communications is a newspaper company. It filed for bankruptcy on Nov. 1, 2015 under the Chapter 11 case number is 15-15311.

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