Investor: 'Wrongly Blocked' From Bidding on STMG

By: Mark Fitzgerald Two days after bidding closed for the bankrupt Sun-Times Media Group (STMG), a suburban Chicago private equity investment manager is claiming he was "wrongly blocked" from meeting with the Chicago Newspaper Guild "and developing a coalition offer" to buy the Chicago Sun-Times parent.

Thane Ritchie, founder of Ritchie Capital Management in Lisle, Ill., said he tried to set up a meeting with the Guild, which is in discussions about the contract give-backs demanded by the sole bidder for STMG, Chicago financier Jim Tyree. But Ritchie says his "point man looking at the investment" was told by unidentified parties that a potential bidder would violate federal labor law if he were to do so.

"This is a travesty -- why shouldn't forward looking private equity sources be able to form a coalition offer with a union, which represents the largest set of stakeholders here?" Ritchie said in a statement. "The only bidder reportedly has made it clear that not only do they refuse to negotiate with the Guild, but that they would actually like to withdraw their bid unless the Guild gives in on everything."

STMG is expected to ask the Bankruptcy Court in Delaware overseeing its case to approve the sale to the Tyree group.

Tyree has said before he will close on an STMG sale he needs all unions to approve the concessions, which include continuing indefinitely a 15% pay cut negotiated earlier this year and, for the Guild units, new seniority, severance and work rules. Nine unions have approved the concessions, but five Guild units have voted to reject them. Two unions have yet to vote on the proposals.

Ritchie said he is urging the Guild, who he said did not know of his interest in the newspaper chain, to the Bankruptcy Court to re-open the bidding process for 30 more days. He wants the union to ask the court to affirm he has a right to talk with the union.

STMG General Counsel Jim McDonough denied anyone was blocked from the bidding process. "Assertions that any part was improperly deterred from making a bid in this process are patently false," he told the Chicago Sun-Times in an article Wednesday by Chris Fusco.

In his statement, Ritchie asserts he is bidding for the assets of other now defunct newspapers, "and has been exploring the decimated newspaper publication business for several months." The Sun-Times is the first still-operating newspaper group he's looked at, he added.

"The American newspaper is not just another recession-driven victim industry like autos or housing," Ritchie said. "Its ink is the lifeblood of our political system and democracy, as our Founding Fathers emphasized by enshrining only this commercial endeavor by name in our Constitution."