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Saturday, June 10, 2000

Star-Bulletin closing after 117 years

Prospective buyer
knocks Star-Bulletin
offering book

Mike McKenna says the amount
of data provided by the
broker is 'a joke'

By Peter Wagner


One prospective buyer of the Honolulu Star-Bulletin says he may give up on the idea, citing frustration over the scarcity of information offered by the newspaper's broker.

"There's nothing in them," said Windward car dealer Mike McKenna, referring to the informational "book" distributed in recent weeks to parties interested in the Star-Bulletin. "It's useless."

"If we don't get the answers by next week, we'll probably shine it on," he said, referring to his group's effort to buy the paper.

McKenna is part of a group that expressed interest in the Star-Bulletin after it was put up for sale April 21 under court agreement by owner Liberty Newspapers LP. The broker, Dirks Van Essen & Murray of Santa Fe, N.M., is working under a 65-day deadline to find a buyer for the afternoon daily.

According to McKenna, the offering book includes historical background on the 118-year-old newspaper, island demographics, circulation figures and advertising rates. What's missing, he said, are numbers needed to make a reasoned investment. Those numbers include the value of Star-Bulletin assets, the newspaper's income, expenses and other details, he said.

"Anybody who's going to buy a business needs to find out about its assets and the value of those assets," McKenna said. "I've talked to some other people who have seen the book, and everybody thinks it's a joke."

Philip Murray, a partner at Dirks and broker in charge, acknowledged the lack of data but said the "sensitive" numbers will be forthcoming to parties deemed serious contenders after the June 19 deadline for prospective buyers to formally express interest in submitting a bid.

"If serious parties can be identified by the 19th, then confidentiality agreements will be signed and the sensitive financial information will be provided," he said.

The current information is meant only to draw a pool of viable contenders with the resources and commitment to take on the Star-Bulletin, he said.

"I would not expect anyone to be able to tell me what they would pay for the Star-Bulletin based on the information that's available," Murray said.

He noted that the Star-Bulletin's finances are difficult to pinpoint because of the joint operating agreement that combines business functions of the Star-Bulletin and the Honolulu Advertiser.

Sharing McKenna's frustration is Josh Wolf- Powers, an agent at New York firm Keilin & Co., which represents Star-Bulletin employees interested in participating in a purchase of the newspaper.

"So far, we haven't seen enough information to form an opinion of what it is exactly that's being sold," said Wolf-Powers, who represents about 75 of the Star-Bulletin's 99 editorial employees. "I would certainly hope that in relatively short order we'd be able to see some substantive information."

Florida-based Liberty last September announced plans to close the Star-Bulletin and end a joint operating agreement with Gannett Pacific Corp., owner of the Advertiser, in return for a $26.5 million payment by Gannett. The April agreement to put the paper up for sale postponed an antitrust lawsuit brought against Liberty and Gannett by the state of Hawaii and a group called Save Our Star-Bulletin. If no prospective buyer is found by the end of this month, preparations for a trial in U.S. District Court will resume.

June 19 is the deadline for interested parties to submit "indications of interest," formal documents to include nonbinding offers, financing plans, nondisclosure agreements and other information.

But McKenna said the available information does not allow a reasoned submittal. "We're still trying to get our questions answered," he said.

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