Bidding rules set for newspapers' auction

Potential buyers of The Inquirer and the Philadelphia Daily News will need to offer at least $50 million and a 15 percent cash deposit - $7.5 million - if they want to bid at Thursday's auction of the papers' parent company, Philadelphia Newspapers L.L.C.

Those minimums were part of a package of bidding rules approved Friday by Chief Bankruptcy Judge Stephen Raslavich in anticipation of Philadelphia Newspapers' second trip to the auction block.

Among other rules of note:

All bids must be in cash. The company's lenders will not be able to use the $318 million in debt they are owed to buy the media firm, which also owns the website Philly.com.

Bidding will be conducted in $100,000 increments.

Not for sale is the company's headquarters at Broad and Callowhill Streets. That already has been pledged to the company's creditors.

The auction will take place in Raslavich's Center City courtroom and be open only to participants. The judge said at a hearing Thursday that the event could be too unruly if the media and the public were in attendance.

The auction is set to begin at 10 a.m. Thursday. There is a noon Wednesday deadline for submission of initial bids.

On Tuesday, Raslavich ordered a second auction after the prospective new owner of the company, Philadelphia Media Network, was unable to reach a contract with the drivers who deliver the newspapers.

Philadelphia Media Network is a collection of 16 financial institutions that represented Philadelphia Newspapers' largest debt-holders, including Angelo, Gordon & Co., Credit Suisse, and Alden Global Capital. Philadelphia Media Network made the winning bid for the company, $139 million, at the initial auction in April.

Philadelphia Newspapers filed for Chapter 11 bankruptcy in February 2009.

Philadelphia Media Network has said it intends to bid again for the company.