Is Liberty Group Publishing Taking Down its 'For Sale' Sign?

By: Mark Fitzgerald Liberty Group Publishing, the big Illinois-based community newspaper publisher that's been up for sale since August, may be pulling itself off the auction block.

Liberty's principal owner, the private equity firm Leonard Green & Partners LP, put the 300-paper chain up for sale as it looked to cash out ahead of the March 2005 expiration of a $135 million revolving credit facility, and a $100 million term loan that matures in 2007. In 2002, Los Angeles-based Leonard Green attempted a cash-out with an unsuccessful attempt at a $225 million initial public offering (IPO) that was pulled in 2003.

Now, however, a Jan. 18 8-K filing with the U.S. Securities and Exchange Commission (SEC) suggests the debt pressure to sell has been dramatically eased.

Liberty said it had entered into a commitment letter with Wells Fargo Bank for a "proposed new credit facility consisting of a $50 million senior secured revolving credit facility ... and a $280 million senior secured term loan" that will replace its current debt and also be used for general corporate purposes.

The filing, which was first reported Thursday in an online story by Jeremy Mullman of Crain's Chicago Business, did not specify when payments on the new indebtedness would be due, but the chain clearly has much more breathing room. Liberty told the SEC it expects to have the new loan and credit facility in place by the end of the first quarter of this year.

Bids were due on Liberty last Oct. 25, and estimates at the time suggested the sale price would be in the range of $500 million, or about 10 times the chain's approximately $50 million Ebitda (earnings before interest, depreciation and amortization).

Liberty CEO Kenneth L. Serota, a former Hollinger International vice president, spearheaded the creation of the Northbrook, Ill.-based Liberty by buying 160 papers from Hollinger's old American Publishing Co. subsidiary for $310 million. The paper took on new debt as it snapped up more small-town monopoly dailies and weeklies. It has about 67 dailies, 140 paid nondailies and 120 free-distribution and niche publications.

Serota did not immediately return a phone call seeking comment on the SEC filing.

New York City investment bankers Bear, Stearns & Co., and the Santa Fe, N.M.-based newspaper brokerage firm Dirks, Van Essen & Murray were listed as handling the proposed sale when it was first announced. Dirks Senior Vice President Philip W. Murray declined to comment, and a Bear, Stearns representative could not be reached.

Leonard Green partner Peter Nolan was out of the office and not immediately available to comment, his office said.


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