Judge to Inquirer Owners: Let’s Have Us an English-Style Auction — You Have a Month
And there you have it. In a ruling issued on Friday, Vice Chancellor Donald F. Parsons of the Court of Chancery of the State of Delaware has decreed that the warring partners in Interstate General Media — the company that owns the Philadelphia Inquirer, Daily News and philly.com — will have a private auction among themselves to determine who will own the operation going forward. And that it must happen right quick:
… I will order the dissolution of IGM. In addition, I will order IGM to be sold in a private, “English-style” open ascending auction between General American and Intertrust. The minimum bid for the auction shall be set at $77 million in cash. I hereby direct General American and Intertrust promptly to confer and submit a proposed form of order implementing these rulings consistent with the other terms of the proposed private auction that were discussed at the conclusion of the evidentiary hearing and during the final argument on April 24, 2014. I further order that in no event shall the auction for IGM be held later than May 28, 2014; that is, no more than thirty calendar days from, and inclusive of, Tuesday, April 29, 2014.
So, imagine the kind of auction you see on TV: a fast-talking auctioneer and bidders who raise paddles or wink or make little shooting gestures with their hands when they hear a number they like. Now imagine that there are just two guys doing the bidding: George Norcross and Lewis Katz.
This is, of course, the option that the George Norcross ownership faction had been hoping for, while the faction led by Lewis Katz and H.F. “Gerry” Lenfest had advocated for a sealed, public auction that would have essentially put the company up for sale on the open market.
Interestingly, Parsons pointed to the Newspaper Guild of Philadelphia’s loss of financial backing in its bid to enter the auction in his determination of which auction process would maximize the value of ownership interests:
I held a two-and-a-half-day evidentiary hearing in this action from April 14 to 16 that was open to the public. On the last day of the evidentiary hearing, the Guild announced that it had received indications of interest from as many as six potential financial backers and publicly identified two of those possible backers. As discussed infra, none of those potential bidders continue to be interested. The end result is that despite all the attention this matter has received, and the fact that it has been known for months that the Company is for sale, Intertrust cannot point to a single individual or entity beyond the parties to the LLC Agreement that is, at this time, interested in participating in a public auction for IGM.
Although admittedly there has been uncertainty as to what type of auction this Court would order since news of the Company’s imminent sale became public knowledge, I am unconvinced that that uncertainty has caused any potential serious bidders to avoid expressing an interest in purchasing the Company.
Essentially, Parsons is saying, it’s been widely known that the company has been “in play” for some time — if anyone on the outside had had serious interest in purchasing the company, they’d have made themselves known by now.
The Norcross camp was quick to offer a statement through spokesperson Daniel Fee:
“We are pleased that Vice Chancellor Parsons has agreed that the best way to end the IGM partnership is through a members only sale process, just as the original agreement stipulated. We are also pleased that he has agreed that the bidding process should be open and transparent and that it should be done quickly.
“Mr. Norcross looks forward to the bidding process and, if he is successful, restarting the progress the company was making before being derailed by this litigation.”
All of which means we finally have an end date — May 28, 2014 — for the current spate of turmoil and tumult that started with the firing and eventual reinstatement of editor Bill Marimow. But fear not, fans of high media drama: It’s also the start date of whatever the next thing will be.
Parsons’s full, 42-page statement is below:
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