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September 1, 2009

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Freedom set to take bankruptcy route this week

FREEDOM Communications Inc, the owner of the Orange County Register, is expected to file for bankruptcy protection this week, according to a published report.

The Wall Street Journal reported on its Website on Sunday that the privately held company has reached agreements with its lenders to restructure its debts.

The report cited unnamed people familiar with the situation.

Robert Emmers, a spokesman for Freedom, declined to comment on Sunday night on the possibility of a bankruptcy filing, but he told The Associated Press that the company is "continuing to work with its lenders to resolve (its) balance sheet issues."

The Journal reported that Freedom's lenders were expected to take control of the company while it operates under bankruptcy protection. The lenders - including JPMorgan Chase & Co, SunTrust Banks and Union Bank of California - hold about US$770 million in debt.

Freedom was founded in the 1930s by R.C. Hoiles and is still majority owned by the Hoiles family. Besides its flagship Orange County Register, the company owns 32 daily and 77 weekly newspapers, plus several television stations.

Family members representing about one half of the Hoiles clan sold their stake in the company more than five years ago when private-equity firms Blackstone Group and Providence Equity Partners acquired a 40 percent share for about US$460 million. The stake of the remaining family members likely would be wiped out by a bankruptcy filing, the Journal said.

Freedom's bankruptcy filing would be the latest in a long line of bankruptcy cases involving media companies that have struggled with a sharp drop in advertising revenue brought on by the growth of the Internet and compounded by a long recession.

The company said last month it would cut pay across the board by 5 percent.
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