The sale of The Inquirer and the Philadelphia Daily News seemed on the verge of collapse Monday, with the prospective new owner reporting no progress in reaching an accord with the company's drivers over their pension benefits.
The new owner, Philadelphia Media Network Inc., has a noon Tuesday deadline to close on its purchase of the newspapers and the website Philly.com. The deadline was imposed by Chief Bankruptcy Judge Stephen Raslavich, who has overseen the company's bankruptcy case.
Without a contract agreement with the drivers, there will be no sale, according to Gregory Osberg, chief executive officer of Philadelphia Media Network.
Osberg declined to say Monday what he thought Raslavich would do if the sale collapsed, but he suggested another auction was a realistic possibility.
If that were to happen, Osberg said, Philadelphia Media Network intended to bid again and be the ultimate winner. "We are not going away," he said.
In the case of a new auction, Osberg said, Philadelphia Media Network, if successful, would consider imposing contract terms on the drivers or closing the company until a contract could be reached.
"Neither of these options is attractive because they could result in the liquidation of the company," Osberg said.
In a statement Monday, the drivers said Philadelphia Media Network was putting "the company at risk" by refusing to "bargain in good faith to maintain our members' pensions."
On Sunday, the drivers, represented by Teamsters Local 628, voted 191-4 to reject Philadelphia Media Network's last contract offer. It is the only union not to have reached a new contract with Philadelphia Media Network, a collection of 16 financial institutions that bought The Inquirer's parent company at auction in April for $139 million.
John Laigaie, president of Local 628, said his members were upset by Philadelphia Media Network's plan to end payments to the Teamsters' pension fund. The company has offered instead to contribute to a matching 401(k) program or a retirement fund jointly administered by the company and the local union.
The drivers, in their statement, said they had agreed to "the full scope of economic concessions and cost-savings that the buyers wanted down to the penny."
They refused, however, to surrender on the pension issue. "Our members and retirees will lose retirement benefits, which they paid for out of their wages," the statement read.
That ran counter to Osberg's description of the offer.
He said the company's plan would not reduce any pension benefits already accrued by drivers. According to company calculations, the average driver will see the same or better retirement payouts under the company's plan, Osberg said.
Laigaie, in response, said drivers not yet vested in the Teamsters' plan would lose all contributions they had made. Others, he said, were wary of 401(k) plans, given the "vagaries of the stock market."
"They want to see that payout they can count every month," he said.
The company's plan received the imprimatur of Gov. Rendell, who, in an interview Monday, urged the drivers to settle with Philadelphia Media Network.
"The vote by the drivers makes no sense at all," Rendell said. "It appears to me that they didn't understand what the company was offering. The company's offer, under the circumstances, was excellent."
Laigaie said he was disappointed that Rendell had taken sides without having spoken to the Teamsters. "I don't know how he can say the vote makes no sense without talking to us first," Laigaie said.
At a news conference Monday afternoon, Osberg said his team had not heard from the drivers since the Sunday vote.
"I urge Mr. Laigaie and the drivers to schedule another vote in the next 24 hours and consider the consequences if we do not come to terms by tomorrow," Osberg said.
Laigaie scoffed at the request, saying it would be impossible to pull his members back together for a vote at such short notice, given the hours many of them work.
At the moment, the papers and website are still the property of Philadelphia Newspapers L.L.C., a group of local investors led by Brian P. Tierney that declared bankruptcy in February 2009.
In statement Monday night, Philadelphia Newspapers urged "all parties involved to focus on a constructive solution that will lead to a successful closing by tomorrow's noon deadline. . . . In the event the parties are not able to resolve remaining issues by noon tomorrow, the company will seek expedited relief from the bankruptcy court to ensure an orderly, consensual and rapid exit from Chapter 11."
To settle $318 million in debt, the company was sold at auction to a group of its creditors, including Angelo, Gordon & Co., Credit Suisse, and Alden Global Capital.
The purchase agreement permits the creditors, now trading as Philadelphia Media Network, to pull out of the deal if they fail to reach contracts with all the company's unions.