Newspapers appeal ruling on credit-bidding

Philadelphia Newspapers L.L.C. yesterday appealed a Bankruptcy Court ruling issued last week that gives its creditors the right to use the $300 million in debt they are owed when the company goes up for auction, now scheduled for Nov. 18.

The ruling would make it easier for the firm's senior lenders to gain control of the media firm in auction bidding. Use of the debt, called credit-bidding, means the lenders do not need cash to make their bid.

Lawrence G. McMichael, who represents Philadelphia Newspapers, said the company had asked U.S. District Judge Eduardo C. Robreno to hear the appeal before the forthcoming auction of the company. Bids on the company are due Nov. 16, and the auction itself is set for two days later.

The company, in a separate filing, said it had reached an agreement with its lenders to extend the time within which it can pursue a reorganization plan without its lenders being able to offer a plan of their own. The new exclusivity period runs to Dec. 4.

Also yesterday, members of Teamsters Local 628 picketed outside the local headquarters of two banks - Wachovia Corp. and Citizens Financial Group Inc. - contending the banks were not pursuing the best interests of the local newspaper company, its readers, and its employees.

Citizens and Wells Fargo & Co., Wachovia's parent, are part of the group of senior lenders that hold a majority of Philadelphia Newspapers' debt. The senior lenders have said they want to take control of the company, which owns The Inquirer, the Philadelphia Daily News, and Philly.com.

The lenders have said they will continue to publish both papers and restore the company to fiscal health.

The Teamsters represent about 450 of the company's employees, including drivers and security guards. The union has been vocal in its support of the current ownership and management, particularly chief executive officer Brian P. Tierney.

Outside the Comcast Center at 17th Street and JFK Boulevard, where Citizens has headquarters, Teamsters passed out fliers that took specific aim at Angelo, Gordon & Co., a New York hedge fund that holds almost 20 percent of the company's debt.

Angelo Gordon would "slash jobs and newspaper coverage and deliver buckets of cash to its prize fat cat investors," the fliers said, repeating and embellishing arguments that Tierney has made.

The fliers urged Citizens Bank, as a senior lender, "to fight Angelo Gordon's plan to rape and pillage the Inquirer and Daily News."

Calls to Angelo Gordon for comment were not returned. Wachovia, through a representative, declined comment.

Andrew C. Kassner, the lawyer representing Citizens Bank in the bankruptcy case, said that along with being a lender, the bank is the agent for the company's more than 30 senior lenders. As such, it must consider the interests of all the lenders, not "one or two," he said.

Citizens Bank, he said, was committed to finding ways to guarantee the "continued existence and growth of both The Inquirer and the Daily News."

John Laigaie, president of Local 628, said the protests were in response to last week's court ruling and strictly the union's idea.

"Everything we've done, we have done on our own," he said.