By: Mark Fitzgerald Creative Loafing goes on the auction block Aug. 25, setting up an expected bidding war for the alternative newspaper chain between its current CEO and its biggest creditor.
The auction was scheduled after Creative Loafing CEO Ben Eason and the group's largest creditor, Atalaya Capital Management LP, agreed on a reorganization plan that will write down the value of Atalaya's $31 million loan to $12 million. All other creditors will be paid in full under the plan, with the exception of BIA Digital Partners, which also provided some funding for Creative Loafing's 2007 acquisition of the Chicago Reader and Washington City Paper. BIA plans to join with Eason in bidding for the chain.
Details of the reorganization plan and court proceedings were reported by Creative Loafing Tampa reporter Wayne Garcia on the paper's Political Whore blog.
Atalaya made the first formal move in the auction with a "stalking horse offer" of $2 million that it says offers the best change of repaying unsecured creditors and emerging from bankruptcy.
Garcia reported that the Eason/BIA group made an initial stalking horse offer of about $1.5 million in cash and free office space.
"But Eason plans to bid at auction, as well, so the two sides will likely be locked in a competition for ownership of the chain again, as they were earlier this year during protracted hearings into the future of the media company," Garcia wrote.
Under the reorganization plan, Atalaya will write down its promissory note to $12 million, which would be repaid at 8% interest-only for five years, after which a balloon payment comes due.
Comments
No comments on this item Please log in to comment by clicking here