Freedom Communications Delays Buyout: WSJ
Weak credit markets have forced privately-held newspaper publisher Freedom Communications to postpone a planned buy-out of two minority private equity partners, Blackstone Group and Providence Equity Partners, the Wall Street Journal reported on
Family-controlled Freedom Communications, had planned to spend more than $500 million to buy back the roughly 45 percent stake held by Blackstone and Providence, the report in the
Journal's online edition said, quoting sources.
Freedom had intended to borrow from General Electric's GE Capital and others to fund the purchase, and the deal was nearly complete a few weeks ago, the report said. (GE is the parent company of CNBC.)
A source was quoted as saying the deal was suspended after banks turned wary of lending to Freedom amid uncertainties facing the newspaper industry and worries about higher borrowing costs.
Representatives from Freedom Communications, Blackstone , Providence, and GE Capital were not immediately available for comment.
The Irvine, California, based Freedom Communications was founded by Raymond C. Hoiles and is one of the last family-held media groups. It owns more than 70 newspapers including the
Orange County Register newspaper, as well as television stations.
In 2003, the newspaper publisher signed a deal to bring in capital from Blackstone Group and Providence Equity Partners to buy out some family member owners, in the process spurning a
$1.84 billion offer from rivals MediaNews Group and Gannett .
The report quoted sources as saying negotiations may resume in a few months. If completed, the deal would likely give the two firms a return of somewhere around 15 percent, the Journal
reported a source as saying.