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Saturday, June 17, 2000

Yes, we're open

Potential buyers
for Star-Bulletin
face Monday deadline

The sale effort could then
move to competitive bids

By Peter Wagner


A six-week effort to sell the Honolulu Star-Bulletin will reach a crossroads Monday, the deadline for potential buyers to show interest in the 118-year-old daily newspaper.

Depending on the response, the fast-track effort could move toward competitive bids, or failure.

"We'll just have to wait and see what we get on the 19th," said Philip Murray of newspaper broker Dirks Van Essen & Murray.

Without viable candidates, a pending antitrust lawsuit against Star-Bulletin owner Liberty Newspapers LP and Honolulu Advertiser owner Gannett Pacific Corp. is expected to resume.

But Murray said he does not plan to disclose the results of his efforts.

"Confidentiality is paramount," he told the Star-Bulletin this week. "It's not in the interest of finding a buyer to talk openly about the process."

While Monday is a deadline in the sales effort, the 65-day deadline to close a deal is June 28. That would give interested parties little more than a week to conduct "due diligence" with financial information about the Star-Bulletin they have yet to receive.

Murray said the judge has indicated a willingness to extend the final deadline if viable candidates come forth.

Some interested parties have complained about the lack of financial information in Dirks' sales offering, saying it did not allow an informed judgment on the property for sale.

Under court stipulations the June 19 submittals were to include nonbinding bids, financing plans and a signed nondisclosure agreement.

Those criteria were relaxed, however, after a meeting this week with Magistrate Barry Kurren to require only a nondisclosure agreement -- promising not to reveal Star-Bulletin business secrets -- and a general expression of interest.

One group planning to submit a letter of interest is "ESOP Star-Bulletin," a majority of the newspaper's approximately 100 editorial employees interested in a buyout or partnership interest in the newspaper.

"We are concerned about the future of the paper, about our jobs and about the community's need to have a competing voice," said Stephanie Kendrick, assistant features editor at the Star-Bulletin and an organizer of the group.

The group, represented by New York investment banking firm Keilin & Co., hopes to obtain the details it needs to put together a financing plan, Kendrick said.

"We haven't been able to address financing because we lack the information bankers and partners would need to discuss that with us," she said.

According to Murray, only "serious" contenders will receive sensitive business information, including revenues, expenses and asset values, after Monday.

Murray, since May 5, has been seeking a buyer on behalf of Star-Bulletin owner Liberty Newspapers. Liberty on April 21 agreed to a court-supervised sale effort with a 65-day deadline to close a deal.

The agreement, presided over by Kurren, put aside a pending antitrust lawsuit filed in U.S. District Court against Liberty and Gannett. The suit, filed last October by the state attorney general, alleges the publishers conspired to create a monopoly in Honolulu.

Gannett, the nation's largest newspaper chain and owner of the Honolulu Advertiser, has a joint operating agreement with Liberty allowing the Star-Bulletin and the Advertiser to share business expenses. Liberty and Gannett last September announced plans to close the Star-Bulletin and end their joint operating agreement with a $26.5 million payment by Gannett to Liberty.

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