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PHILADELPHIA A local group says it will raise its bid for The Philadelphia Inquirer and Philadelphia Daily News at auction by $20 million to about $87 million.

The local group includes Toll Bros. co-founder Bruce Toll and Rohm & Haas heir David Haas.

The group hopes its offer would erase at a discount the $400 million in debt that forced Philadelphia Newspapers into bankruptcy in February. The offer includes $37 million in cash, $30 million in real estate and a $20 million bank note.

Senior lenders also want to take over the company and install new management, ousting current CEO Brian Tierney.

They are preparing a rival bid and have a key advantage: the right to use the $300 million in ''IOUs'' they hold from owners to bid at the Nov. 18 bankruptcy auction.