An investor group led by Chicago businessman James C. Tyree entered into a “stalking horse” asset purchase agreement for the Chicago Sun-Times and its 58 community newspaper siblings, parent Sun-Times Media Group announced Tuesday evening.
Tyree is buying substantially all of Sun-Times Media Group for $5 million in cash, and will assume certain liabilities the company estimates at about $20 million.
Under this so-called “363 sale,” named for the section of the bankruptcy code, the Tyree group will not be taking ownership of Sun-Times Media Group’s biggest liability, a possible $600 million tax bill related to sales of newspapers when the company was run by convicted felon Conrad Black.
Sun-Times Media Group, which sought bankruptcy protection in March, said it would ask the U.S. Bankruptcy Court in Delaware to allow an expedited 363 sale.
The buy offer by Tyree, chairman of the Chicago-based Mesirow Financial Holdings, is called a “stalking horse” bid because there will be a bidding process before the Bankruptcy Court gives its blessing to the purchase agreement. If other qualified bids are received, an auction would be held under the court’s oversight.
It is considered highly unlikely that anyone else will bid for the Sun-Times, which is losing money—most recently $3.8 million in July—and is the second newspaper in the Chicago area, well behind the rival Chicago Tribune in both circulation and financial health. Although the Tribune’s parent, Tribune Co., was reeling under its $13 billion debt load and has been in bankruptcy reorganization since last December, the newspaper continues to be cash flow positive.
Jeremy L. Halbreich, Sun-Times Media Group’s chairman and its interim CEO called the agreement an “exciting and very positive step in the process of securing the future of Sun-Times Media Group’s distinguished print and online brands.” He said the purchase agreement “will create and establish a wonderful future for our publications and for our employees.”
Halbreich noted in the announcement that Sun-Times Media Group employees, including unionized members, had agreed to pay cuts, furloughs and other cost-cutting measures in the past year.
“The commitments made by our employees have been instrumental in achieving the rapid turnaround and successes enjoyed by Sun-Times Media Group over these past few months and their continued commitment and support will help ensure a healthy, stable future for all of us and for our products,” Halbreich said.