One past newspaper bidder likely to skip new auction

With a new auction for The Inquirer and Philadelphia Daily News one week away, at least one past bidder is saying he will likely take a pass this time around.

Ronald N. Stern, president of Stern Partners, a Canadian investment group, said he did not expect his firm to bid on the papers' parent company, Philadelphia Newspapers L.L.C., this time around, despite having made an $88 million offer for it in April.

"We are looking at it as we speak, but to be forthright with you, I doubt we will be there," Stern said Wednesday in a phone interview. "Given the timing and the other circumstances, I doubt it is worth our while to jump in."

Which means that, at the moment, only one group has publicly said it will bid again for the company: Philadelphia Media Network Inc., the collection of 16 financial institutions that won the auction in April for the papers and the website, Philly.com, with a bid of $139 million. Among those making up Philadelphia Media Network are Angelo, Gordon & Co.; Credit Suisse; and Alden Global Capital.

Told that Stern most likely would not bid, Gregory Osberg, chief executive officer of Philadelphia Media Network, offered no comment other than that his group looked "forward to engaging in the auction process."

April's auction was central to Philadelphia Newspapers' reorganization plan to exit bankruptcy; the company filed for Chapter 11 in February 2009. Money raised through that sale would go to settle Philadelphia Newspapers' $318 million secured debt.

There were three bidders then: Philadelphia Media Network; Stern Partners; and a group of local investors that included businessman Raymond G. Perelman; his son, Ronald Perelman, owner of Revlon Inc. cosmetics; philanthropist David Haas; and William A. Graham, chief executive officer of insurance broker The Graham Co.

The local group, with a large outlay from the Perelmans, eventually offered $129 million for the company.

On Tuesday, Raymond Perelman was in court when Chief Bankruptcy Judge Stephen Raslavich ordered a new auction for the company after Philadelphia Media Network failed to close on its purchase. The sale collapsed because Philadelphia Media Network was unable to reach a contract agreement with company drivers.

After the hearing, Perelman said he needed time to review the documents outlining the Sept. 23 auction before deciding if he would bid again.

J. Gregory Milmoe, Perelman's attorney, said Wednesday that his client was still studying the situation.

Haas and Graham did not return calls for comment Wednesday. Another member of the local group, H.F. "Gerry" Lenfest, declined to say whether he would be part of a new bid.

The local group's original bid had been championed by Brian P. Tierney, then-chief executive officer of Philadelphia Newspapers. It was anticipated he would stay on with the company had the local group won in April.

On Wednesday, Tierney, speaking to a large group of company managers, said he would not serve as company CEO going forward, no matter who wins next week's auction.

Tierney said that he had two business offers he was weighing and that he expected to announce which he would take in about two weeks.

"I want to make it clear, under no circumstances will I be CEO here," he said in an interview, referring to Philadelphia Newspapers.