Liberty Group Publishing Sold To NYC Investment Firm

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By: Mark Fitzgerald

Liberty Group Publishing Inc., the Northbrook, Ill.-based publisher of 274 papers in 15 states, will be sold to the New York City investment firm Fortress Investment Group LLC, the company announced Wednesday.

No terms were announced, said Dirks, Van Essen & Murray, the Santa Fe, N.M.-based newspaper merger-and-acquisition firm that served as one of the advisors to Liberty Group in the transaction.

The sale announcement comes two years after Liberty Group’s investors failed in their attempt to float a $225 million initial public offering — and four months after the chain reportedly was pulled off the auction block. Liberty Group was first put up for sale last August.

Liberty Group’s principal shareholder, the private equity firm Leonard Green & Partners LP, had been looking to cash out ahead of the expiration in March of $135 million revolving credit facility. Instead, it reported that on March 29 it borrowed $180 million and redeemed some $185 million in senior subordinated notes that were due in 2008.

When it was for sale over the summer and fall, Liberty put a deadline of Oct. 25 on bids. It’s not known if it got any offers, but at the time analysts estimated the sales price would be in the range of $500 million, or about 10 times the chain’s approximately $50 million Ebitda (earnings before interest, taxes, depreciation, and amortization).

In 2002, Liberty served notice that it was attempting an IPO, but it withdrew the attempt in 2003.

Liberty CEO Kenneth L. Serota, a former Hollinger International vice president, founded Liberty by buying 160 papers from Hollinger’s old American Publishing Co. subsidiary for $310 million. The paper went on a buying spree, pursuing small-town monopoly dailies and weeklies. Its publications include about 67 dailies and 140 paid nondailies, with the rest free-distribution and niche publications.

Fortress Investment manages approximately $15 billion, according to its Web site. The firm says its private equity funds of approximately $6.9 billion concentrate on “investing in asset-based and cash flowing businesses,” including media, telecommunications, and real estate.

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