Prospective buyersBy Peter Wagner
have complained about
Federal Magistrate Barry Kurren ordered that financial information requested by potential buyers of the Honolulu Star-Bulletin may be sought directly from the court if the information is being withheld by the newspaper's sellers.
The order, filed today in U.S. District Court, came after potential buyers raised concerns over tight controls on information established by Star-Bulletin owner Liberty Newspaper L.P. and its Hawaii Newspaper Agency business partner, Gannett Pacific Corp., during the current sales process.
"They obviously don't want to sell the the newspaper," said Windward auto dealer Mike McKenna, who said he has been unable to get the financial details he needs to formulate a business plan or make a bid on the Star-Bulletin.
McKenna earlier had been aligned with a group, headed by former Hawaii congressman Cec Heftel, that is pursuing a possible bid for the paper. But last month, McKenna said he split from that group and voiced his frustration with the process.
The car dealer is now leading his own effort to possibly bid for the paper but is still expressing doubts about the process.
"Every time you turn around, there's another stumbling block," he said today.
Kurren's order, which formalizes the earlier-announced Aug 14 deadline for bids, lays out a process whereby interested parties may request copies of information from a newspaper broker representing Liberty.
But if the broker, Dirks Van Essen & Murray of New Mexico, is unable to satisfy the request, parties may submit written requests to the court.
The broker, has been seeking a buyer on behalf of Liberty Newspapers since May 5. Liberty on April 21 agreed to a court-supervised sale effort with a 65-day deadline to close a deal.
Liberty attorney Diane Hastert said today that the company is trying to accommodate buyers' needs.
"I have no comment other than we're simply trying to facilitate this process in whatever way we can," she said.
Josh Wolf-Powers, an associate at Keilin & Co. representing Star-Bulletin employees as potential buyers, said he has run into similar problems getting information from Liberty's "data room," set up in a Honolulu law office.
"We've expressed concerns in the past about the availability of information and the consequences for the process of the sale of the newspaper," he said. "While we're pleased to see additional information being made available, we continue to remain concerned."
Wolf-Powers, whose company specializes in employee stock ownership plans, called Liberty's data room setup "burdensome" and discouraging to a buyer.
"For people who are conducting due diligence, a process that's burdensome translates into discouragement," he said.
According to McKenna, buyers must review Star-Bulletin business records in the data room and are not allowed to take the records out, or make make photo copies without making a request.
"There's a monitor there with you all the time," he said. "It's a case of, if you want something you have to put in a request and they'll let you know if they can accommodate you."
Florida-based Liberty Newspapers last September announced plans to close the Star-Bulletin and end a 20-year joint operating agreement with Gannett, owner of the Honolulu Advertiser.
The JOA, which allows the Star-Bulletin and the Advertiser to share business expenses while maintaining separate newsrooms, was due to expire in 2012.
The deal, announced jointly with Gannett, was to involve a payment of $26.5 million by Gannett to Liberty with no intention to offer the Star-Bulletin for sale.
An anti-trust lawsuit brought by the State of Hawaii against Liberty and Gannett in October was put on hold in April when parties agreed to put the newspaper up for sale during a 65-day period. The deadline for final offers, which expired last month, was extended to Aug. 14.
An undisclosed number of interested parties have responded to the sales effort and since June 27 have been looking at financial information about the Star-Bulletin in the data room, set up in a Honolulu law office.
Bulletin closing archive