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Tuesday, September 14, 2010

Philadelphia Inquirer Buyer Said to Cancel Purchase, Forcing New Auction


A deal to sell the Philadelphia Inquirer newspaper fell apart, forcing the publisher operating under bankruptcy protection to consider putting itself up for auction, a company attorney said today.

Philadelphia Newspapers LLC, the company that controls the Inquirer and the Philadelphia Daily News, is negotiating with the group of lenders who backed out of a contract to buy the newspapers today, Lawrence G. McMichael, a lawyer for the company, said in an interview. The company can continue to operate because it has enough cash and is approaching the busiest time for advertising sales in the newspaper industry, McMichael said.

“I don’t know what we’re going to do,” said McMichael, with the law firm Dilworth Paxson LLP. Fred Hodara, an attorney for the lenders, declined to comment.

Under the company’s plan to exit bankruptcy, a group of the newspapers’ lenders, including hedge fund Angelo Gordon & Co. and a unit of Credit Suisse Group AG, had until noon today to complete the purchase of the company.

The sale collapsed after members of the Teamsters union refused to agree to change their pension plan, a person familiar with the standoff said today. Under the contract to buy the newspapers, the lenders had the option to back out if they failed to win support from all of the unions.

Frank Sabatino, a lawyer for the Teamster Pension Trust Fund of Philadelphia & Vicinity, didn’t immediately return a call for comment.

‘No Worries’

Philadelphia Newspapers had planned to file court papers this afternoon seeking a new auction, McMichael said. Those plans are on hold while the company talks to the lenders and the lenders talk to the Teamsters, he said.

“There is no reason for panic by anyone,” McMichael said. “There are no worries about shutting down.”

The newspaper company filed for bankruptcy in February 2009, blaming the recession and a slowdown in advertising.

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