Tierney to press probe on taping

The chief executive of the

Daily News

and

Inquirer

, Brian Tierney, vowed yesterday to continue pressing for an investigation of charges that one of the company's creditors illegally recorded a private meeting in Tierney's office last November.

Tierney told reporters that he noticed the recording device, toward the end of a 2 1/2-hour meeting in his office. The group included 20 or 30 people, Tierney said, reviewing "confidential, proprietary financial information, not available to the general public."

A vice president of the CIT Group, Vincent DeVito, acknowledged at the time that he had been recording the meeting, according to Tierney.

Tierney said DeVito stopped the device when he was advised that Pennsylvania law prohibits the recording of private meetings without the consent of all parties.

But a bit later in the meeting, Tierney said, he noticed the recording had resumed.

Calls to a spokesman for the CIT Group were not returned last night. The company, based in New York City, owns an estimated $15 million worth of debt in the Philadelphia newspaper company.

Tierney spoke with reporters yesterday outside a courtroom in U.S. Bankruptcy Court at 9th and Market streets, where the company is trying to renegotiate about $400 million in debt in a Chapter 11 reorganization.

Judge Jean K. FitzSimon scheduled a hearing for Monday to consider Tierney's bid to hire a law firm to investigate the illegal taping allegations. Tierney said he intends to testify.

"These are serious, serious issues we need to get to the bottom of," Tierney said. "I can't just ignore what's happened."

He said the company's non-public data could have been useful to people trading the company's debt. And if the judge were to find that any of the company's creditors acted improperly, Tierney said, the debt they hold could be subordinated to that of other creditors.

Apart from the taping issue, lawyers for the newspaper company and its creditors reached a compromise agreement on the papers' bid for continued use of cash collateral for ongoing operations.

The creditors dropped a request for appointment of two independent "directors/managers" to oversee newspaper operations and the reorganization effort.

They also agreed to the hiring of Sonenshine Partners of New York City as an investment-banking adviser, leading negotiations with the newspaper's largest creditors. Tierney agreed to provide the creditors with detailed three-month reports on the company's projected and actual cash flows, and to deliver a three-year business plan by Monday.

In a related filing, the company confirmed that it has lowered earning projections for 2009 from $25 million to $11.8 million, before accounting for taxes, interest, depreciation or amortization. The new figures are based on more conservative projections for advertising revenue, the company said. *