CHICAGO — Struggling newspaper publisher Sun-Times Media Group said Tuesday that a private investor group led by Chicago banker James Tyree will bid $5 million in cash for its assets in a bankruptcy court auction.
The group, called STMG Holdings LLC, also would assume about $20 million of Sun-Times' liabilities, the company said.
Sun-Times Media, which owns the Chicago Sun-Times and 58 suburban Chicago newspapers and Web sites, filed for Chapter 11 bankruptcy protection in March. The media company listed $479 million in assets and $801 million in debt in its bankruptcy filing.
According to the Internal Revenue service, Sun-Times Media Group owes as much as $608 million in back taxes and penalties related to the business practices of former owner Conrad Black, when the company was called Hollinger International. Black, who was convicted of fraud for siphoning millions of dollars from the company, is serving a prison sentence.
But bankruptcy means that most of the liabilities wouldn't be part of the company's sale.
In its statement Tuesday, Sun-Times offered no details on STMG Holdings' other investors or what the deal would mean for its newspapers. The so-called "stalking horse" bid is contingent on no other higher bidder coming forward, as well as agreement from unions and a judge's approval.
"I certainly believe this is a good business opportunity, though certainly very risky," Tyree said in a telephone conversation late Tuesday.
In May, when the Mesirow Financial Holdings chairman began reviewing the media company's books, Tyree said his goal would be to keep all of Sun-Times' properties. He reiterated that view late Tuesday, saying he had no plans to sell off anything. Tyree said he saw strength in a media group that concentrates on local news and issues and believes continuing STMG would have "meaningful impact" on the Chicago area.
Sun-Times Media Group CEO Jeremy Halbreich said Tuesday's agreement was "an exciting and very positive step" for the company's future. In a story posted on the Chicago Sun-Times Web site Tuesday, Halbreich said there are no immediate plans to sell off any of the company's publications, but did not rule out further job cuts.
"The new investors are focused on supporting and positioning the new company to succeed both financially and qualitatively in the Chicago marketplace," Halbreich said in a statement. "The company and all of our employees have taken extraordinary steps to enhance revenues, reduce costs and strengthen our organization to become a leaner, more efficient company that is capable of meeting the demand for news and information in this increasingly digital age."
The company has undertaken several cost-cutting measures in the last several months, including terminating jobs and closing a suburban printing plant.
Declining advertising revenue and readers' continuing shift to the Internet has driven multiple newspaper publishers into bankruptcy protection in the last year. The Tribune Co., the Sun-Times' biggest rival in Chicago, filed for Chapter 11 in December.