Freedom Buyout Plan Expected By April

By: Joe Strupp Efforts to keep Freedom Communications Inc. in the hands of the founding Hoiles family were boosted last week when the Irvine, Calif.-based company's board of directors gave initial support to a plan for fourth-generation family members to buy out other family shareholders. The board asked those younger members to devise a way within the next eight months to finance such a move.

Freedom CEO and President Samuel C. Wolgemuth declined to comment on the situation, but a company statement said that the board's members "support the proposed direction of fourth-generation shareholders to increase their ownership in the company." The statement also reiterated that the company is not for sale to outsiders.

Freedom owns 28 daily newspapers, 37 weeklies, and eight TV stations. In addition to its flagship -- The Orange County Register in Santa Ana, Calif. (daily circulation 314,759) -- the company counts among its bigger dailies The Gazette in Colorado Springs, Colo. (daily circulation 100,704).

The 13-member board met last Tuesday to discuss three sale options, including the transfer to fourth-generation shareholders. The other alternatives were selling the company, valued at between $1 billion and $2.5 billion, to an outside entity or allowing all shareholders to engage in a buyout among themselves. The board meeting followed two days of intensive meetings among 40 of the more than 80 Hoiles family shareholders, who reviewed 13 options for the company's future before narrowing their choices to three.

The fourth-generation shareholders, numbering 23 family members, currently own 18% of the company, according to Christopher Shaw, a London-based broker representing several shareholders, including Timothy C. Hoiles, a third-generation family member and a director who supports selling the company to outsiders. Shaw estimated the younger generation would have to raise close to $2 billion to complete the buyout of other family members.

"It would inevitably be a better price to sell to an outside buyer," said Shaw. He said he has four potential bidders for the company. "They are all within the $2 billion-to-$2.5 billion range." Shaw would not comment on the identity of the would-be buyers.

Tim Hoiles, who owns 8.6% of the stock and 9.8% of voting stock, remained opposed to transferring shares within the family. But he'd consider an internal transfer of shares should it prove financially attractive. "There is a wait-and-see attitude," said Hoiles. "It's too early to tell what will happen."

Freedom's board has asked the younger shareholders to present their buyout plan at the company's next annual meeting in April.