A DELAWARE Chancery Court judge ordered late yesterday that Interstate General Media, the parent company of the Daily News, the Inquirer and Philly.com, should be dissolved and sold in a private "English-style" auction.
Vice Chancellor Donald F. Parsons Jr.'s decision backs the plan proposed by IGM co-owner George E. Norcross III. Parsons ordered the minimum bid be set at $77 million in cash. It must be held no later than May 28.
The private auction is limited to the company's co-owners Norcross and Lewis Katz, who both want to dissolve the company because they are unable to agree on IGM's governance.
Norcross and his team had sought a private auction with incremental bidding that would allow Norcross and Katz to bid against one another. Katz and fellow minority owner H.F. "Gerry" Lenfest sought an open auction that could attract outside bidders each submitting a single sealed bid.
It was unclear whether Katz would appeal the decision.
In reaching his decision, Parsons said the private auction could be conducted faster than a public auction. He favored the Norcross proposal over Katz's plan "because of the real harm to the company's value that may result from prolonging this dispute unnecessarily."
A private IGM auction would also be less expensive, Parsons said in his ruling. A public auction "would require IGM to retain both an investment bank and legal counsel to assist it through the transaction," he wrote. Parsons cited IGM's legal and bank fees in its 2012 purchase of the media outlets that cost the company $2 million.
Parsons said he also doubted that a serious bidder would emerge, a key point of Katz's proposed public auction. "The record is devoid of any evidence that suggests that a third party actually would be willing to acquire IGM," he wrote.
Norcross spokesman Dan Fee said in a statement that "Norcross looks forward to the bidding process and, if he is successful, restarting the progress the company was making before being derailed by this litigation."
The judge "has agreed that the best way to end the IGM partnership is through a members-only sale process," Fee added.