Chief Executive Officer Brian Tierney and investor Bruce Toll have offered senior lenders Angelo, Gordon & Co. and CIT Group Inc. $50 million to bring the Philadelphia Inquirer, the Philadelphia Daily News, and Philly.com out of bankruptcy, reports the Philadelphia Inquirer. This proposal was one of several new developments in bankruptcy hearing currently underway in Philadelphia.
Toll and Tierney purchased the papers in 2006 for around $515 million. Since their acquisition, revenues has dropped 20 percent. This new proposal calls for a significant amount of debt forgiveness on the part of the two major lenders. Citizens Bank, has not provided a formal written response as of yet.
Other key developments in the case include:
An agreement allowing the company to continue using its cash to operate the business for the next five weeks. The company projected that it would have $11 million in cash and $48 million in accounts receivable on May 22, when the agreement on the company’s use of its cash expires.
As part of that agreement, the leading group of senior lenders dropped demands regarding a chief restructuring officer and the imposition of two independent “directors/managers” to oversee the company’s operations and reorganization. Those demands were made in a court filing Friday.
In a subsequent hearing schedule for Monday, Tierney hopes to testify regarding the lenders’ accusation that he “was enriching himself with raises and bonuses despite the company’s financial distress.”
According to Tierney, the creditors sought to retain his as CEO, going so far as to offer him $2.5 million in equity and a salary and bonus package worth $1.2 million. “This is what I will testify under oath next week,” he told the paper. “I have it in writing. I rejected this. This is why it’s so disingenuous for them to say they’re upset.”
Prior to acquiring the newspapers neither Tierney nor Toll had any newspaper experience.