Newspaper accord reached
'Didn't want to be a lightning rod,' says CEO Tierney
Brian Tierney has agreed to step down as chief executive of the company that owns the Daily News, Inquirer and philly.com on May 21. .
He will remain as publisher of the Inquirer until the bankrupt company is officially sold to its prospective owners and will be available to consult with the new owners "as needed," according to a statement released yesterday on behalf of Tierney.
Yesterday's agreement resolved differences between Tierney and the papers' incoming owners that had threatened to torpedo a peaceful transition until ownership officially changes hands.
Tierney said in an interview that he agreed to leave as CEO because he "didn't want to be a lightning rod" for controversy during the transition to new ownership.
The prospective owners must focus on a business plan and negotiate new labor agreements, Tierney said. "It's all about moving forward and getting the company out of bankruptcy. It's good for [the new owners] to get their arms around the place."
Joe Bondi, a management consultant who has advised the current owners during their bankruptcy, will take over as interim CEO until the sale of the media company is completed.
The tentative closing date is late June or early July, but that is dependent upon the new owners reaching labor agreements with the newspapers' unions.
The agreement was hammered out after more than three days of closed-door negotiations between attorneys for Philadelphia Newspapers and its secured creditors, a number of whom will become equity stakeholders in the new company, which is referred to in bankruptcy filings as PN Purchaser Co. LLC.
Tierney said Chief U.S. Bankruptcy Judge Stephen Raslavich had played a constructive role in helping to broker the agreement.
Tierney also said that he had talked with friends in the business community who advised him that it was in both his interest and that of the newspapers' future to move on.
According to a bankruptcy court filing Thursday, the equity partners in the new ownership group will include Credit Suisse Securities, a New York investment bank, and three New York-based hedge funds, Alden Global Distressed Opportunities Fund, Venor Capital Management Master Fund and Halbis Distressed Opportunities Master Fund.
The court filing said Angelo, Gordon & Co. is a new lender to the newly formed company and not an equity stakeholder. Fred Hodara, the lead attorney for the secured creditors, was unavailable for comment yesterday.
Angelo, Gordon & Co., Credit Suisse, Venor and Halbis are all secured creditors of the current owner, Philadelphia Newspapers LLC., and were among the bidders that acquired the newspapers and philly.com for $135 million in cash and real estate at a bankruptcy auction in Manhattan on April 28.
After the auction, Tierney pledged there would be a smooth transition.
Within days of the auction, the prospective buyers named a new executive team: Greg Osberg, former president and publisher of Newsweek and Newsweek.com, will be chief executive and Bob Hall, former Philadelphia Newspapers publisher, will be chief operating officer.
Hall could not be reached for comment yesterday.
Before closing the bankruptcy, Raslavich must rule on whether the proposed reorganization plan to bring Philadelphia Newspapers out of bankruptcy is fair to all debtors and leaves the successor company in a reasonable position to succeed. That hearing had been scheduled for May 25 but is now likely to be delayed.
The agreement reached yesterday also put to rest a brouhaha between Tierney and the senior lenders over an unauthorized-taping incident during a November 2008 meeting.
Tierney contended the incident poisoned relations between the parties to settle its $318 million in debt through negotiations. Philadelphia Newspapers filed for bankruptcy in February 2009.
A source familiar with the negotiations said yesterday that there would be no further litigation over the taping incident and that the incoming executive team would have access to more junior-level managers during the transition period.