Freedom Communications back in bankruptcy; CEO-led investors make bid

By Caroline Salls

Pittsburgh, Nov. 2 – Freedom Communications, Inc. returned to Chapter 11 bankruptcy with a filing made Sunday in the U.S. Bankruptcy Court for the Southern District of Texas as part of a transfer of ownership and financial restructuring.

The company said it a news release that local investors led by Rich Mirman, Freedom’s chief executive officer and publisher of the Orange County Register and the Press-Enterprise, is initiating a bid to purchase the assets of the company. Mirman will expand his investment stake as a principal owner and continue to oversee day-to-day operations of the company.

Freedom said Caribou Industries owner Mike Harrah will be among the primary investors participating in the bid.

“As publisher, I am committed to the company’s mission of delivering relevant and essential local information that serves our communities,” Mirman said in the release. “As an investor, I am dedicated to strengthening the financial health and well-being of the business.”

Mirman says Freedom Communications is on course to generate positive operating cash flow in 2015, which he said is a dramatic turnaround from being unprofitable during the previous two years when the company struggled to cover its financial obligations and began to accumulate significant debt.

As previously reported, Freedom emerged from its first Chapter 11 bankruptcy case in April 2010.

However, in a letter to associates released Monday, Mirman said the accumulated financial losses incurred in 2013 and 2014 under previous leadership left its mark on Freedom, and “the business is struggling to cover its financial obligations and is overloaded with debt.”

Freedom Communications said it will continue to fund daily operations, including post-bankruptcy payments to vendors and partners and customer and employee obligations through the duration of the restructuring.

The company said it will continue to manage its daily business operations without any interruption.

In accordance with requirements of section 363 of the Bankruptcy Code, Mirman and Harrah will submit a “stalking horse” bid to purchase the assets of the company that includes a cash component, assumption of debt and the retention of an employee pension program.

The company said the bidding process is expected to be complete in 60 to 90 days.

According to the Chapter 11 petition filed Nov. 1, Freedom has $10 million to $50 million in both assets and debt.

The company’s largest unsecured creditors are Angelo Gordon Co. of New York, with a $7.45 million debt restructuring services claim; American Express of Weston, Fla., with a $1.94 million credit card claim; Latham & Watkins LLP of Boston, with a $1.5 million legal services claim; and Ponderay Newsprint Co. of Los Angeles, with a $1.04 million services claim.

The company is represented by Lobel Weiland Golden Friedman LLP.

Freedom Communications is a Santa Ana, Calif.-based newspaper company. The Chapter 11 case number is 15-15311.

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