By Mary Ann Milbourn: Freedom News Service
IRVINE, Calif. — Freedom Communications Inc., parent company of the Quay County Sun, announced Friday it has emerged from bankruptcy reorganization.
The emergence from Chapter 11 bankruptcy relieves Freedom of $450 million in debt, but it brings an end to the family ownership of a media chain that provided a unique voice in American journalism.
Three investment companies — Alden Global Capital, Angelo Gordon & Co. and Luxor Capital Group — and a group of lenders led by JPMorgan Chase will assume ownership of Freedom, which is also the parent of the group’s flagship newspaper, The Orange County (Calif.) Register.
Unsecured creditors will divide at least $32.2 million. Freedom will go forward with $325 million in debt.
Freedom’s founding Hoiles family will no longer have an interest in the company, ending more than 75 years of ownership that started with Raymond Cyrus “R.C.” Hoiles, who purchased the Register in 1935 as a platform for his libertarian views on individual freedom and limited government.
“We’re out, and that’s great,” said Burl Osborne, Freedom’s chief executive officer. “A great umbrella of uncertainty is lifted. It means Freedom is a company. It’s a viable company, and we’ll be a strong company and have the wherewithal to be successful in the near and far future.”
Osborne said he has seen no indication the company would move away from its long-held libertarian views.
In keeping with libertarian principles, however, he said it would be left to the individual properties to reflect the values of their communities.
Unlike other newspapers that recently have exited bankruptcy, Osborne said he does not expect any wholesale layoffs.
“A great deal of what had to be done has already been done,” he said. “I don’t foresee anything like what we experienced over the last couple of years.”
Freedom’s financial woes date back to 2004 when the company borrowed $1 billion to buy out family members who wanted to cash in their shares and to cover $332 million in existing debt and the deal’s transaction costs. The family retained control, but two investment firms, Blackstone Group and Providence Equity Partners, came in as minority owners.
The timing, however, was bad as the newspaper business moved into tough times with companies facing declining circulation and advertising revenue and increased competition from the internet and new media.
When the recession hit, the debt sank them. Freedom filed for bankruptcy reorganization Sept. 1, one of 13 newspaper companies that have sought Chapter 11 protection.