Sept. 22 (Bloomberg) -- The Philadelphia Inquirer and its sister newspaper will have two bidders competing to buy them out of bankruptcy at an auction in which the opening offer is less than half the value of a deal that fell apart this month.
Lenders who backed out of their contract to buy the newspapers for $139 million on Sept. 14, will compete with Raymond Perelman, father of billionaire Ronald Perelman, said Lawrence G. McMichael, an attorney who represents the holding company that owns the two newspapers.
“We have two bids,” McMichael said today in an e-mail. The bids were due today for the auction tomorrow.
The auction will be the second this year for the Inquirer and the Philadelphia Daily News, which are owned by bankrupt Philadelphia Newspapers LLC. Lenders owed more than $200 million won the first auction. They refused to complete the deal after members of the Teamsters union rejected changes to their pension plan.
Under rules approved by Judge Stephen Raslavich on Sept. 16, the new opening bid must be at least $50 million.
The newspaper company filed for bankruptcy in February 2009, blaming the recession and a fall in advertising.
Fred Hodara, a lawyer for the lenders, and J. Gregory Milmoe, an attorney for Perelman, weren’t immediately able to respond to phone calls seeking comment.
Raymond Perelman was among local investors who lost an auction this spring to the company’s main lenders, including hedge fund operator Angelo Gordon & Co. and a unit of Credit Suisse Group AG.
Also today, Raslavich agreed to open the auction, which will be conducted in his Philadelphia courtroom, to the press, McMichael said.
Philadelphia Newspapers filed for bankruptcy two years after Brian Tierney, now publisher, and a group of investors bought the company. In court filings, Philadelphia Newspapers listed assets and debt of as much as $500 million each.
The Inquirer, founded in 1829, is the third-oldest daily newspaper in the U.S. and has won at least 18 Pulitzer Prizes. The Daily News, a tabloid founded in 1925, won a Pulitzer Prize this year for investigative journalism. The two newspapers have had a common owner since 1969, when they were bought by Knight Newspapers Inc.
The case is In re Philadelphia Newspapers LLC, 09-11204, U.S. Bankruptcy Court, Eastern District of Pennsylvania (Philadelphia).
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