A Canadian investment firm is among seven or eight entities said to be considering bidding to buy the Inquirer and Daily News and bring their parent company out of its Chapter 11 bankruptcy proceedings.
A delegation from Stern Partners Inc., of Vancouver, which owns a controlling interest in the Winnipeg Free Press, the Brandon Sun and seven community newspapers, visited Philadelphia last week to meet with Brian P. Tierney, chief executive of the Philadelphia newspapers, along with other company managers and newspaper union leaders.
The Canadian firm is among some 20 potential bidders that have signed nondisclosure agreements, allowing them to review detailed financial records of the Philadelphia newspapers, in advance of an auction, likely to happen later this year.
Lawrence McMichael, the attorney representing the Philadelphia newspapers in U.S. Bankruptcy Court, said he believes that seven or eight of the entities remain interested in submitting bids for the newspapers and their Web site, Philly.com.
For now, the auction schedule is on hold, waiting for a decision from the 3rd Circuit U.S. Court of Appeals on a critical issue - whether the newspapers' top lenders, who are owed more than $300 million secured by the newspapers' assets, will be able to submit an auction bid based on their IOUs, instead of cash.
If the secured lenders win that appeal, they'll have an advantage over other bidders. But if the secured lenders ultimately want to sell the newspapers instead of running them, the auction proceedings could demonstrate who's interested in buying the papers and what they're willing to pay.
Tierney declined to identify any of the potential bidders, citing the confidentiality of the process.
But last week's delegation from Vancouver and Winnipeg, headed by Ronald N. Stern, founder of Stern Partners, met with so many people that the Canadians' interest became widely known.
Stern returned a call from the Daily News but said that under the nondisclosure agreements, "any potential parties are prohibited from discussing any interest they may have."
"But all the best," Stern added. "I enjoyed looking at your papers."
Besides its interests in newspapers, Stern Partners owns two paper mills, a packaging firm, an apparel maker and a garden-products company, according to its Web site.
John Laigaie, president of Teamsters Local 628, representing delivery-truck drivers, said he had met with Stern and an associate for about 45 minutes.
"They were asking general questions, what's going on with the newspapers. And they talked about [union] concessions, more than once. . . . By the third time, I had to tell them, 'You can't just come in here and think you're gonna hatchet us all.' "
Whoever eventually wins control of the newspapers, federal bankruptcy laws will permit them to negotiate new contracts with the 16 union bargaining units now working at the Philadelphia papers.
As industry revenues have declined over the past three years, newspaper unions throughout the country have agreed to wage cuts, layoffs, furloughs and other cost-reduction moves.
All the Philadelphia unions have been working under extensions of contracts that expired last summer. No significant negotiations have occurred.
"I'd be a damn fool to start bargaining until we know who the new owners are gonna be," Laigaie said. "The last man standing - whoever owns the joint - that's who I'll have to bargain with."