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Register owner puts off buyout of 2 partners

December 28, 2007|From Reuters

Weak credit markets have forced privately held newspaper publisher Freedom Communications Inc., owner of the Orange County Register, to postpone a planned buyout of two minority private equity partners, Blackstone Group and Providence Equity Partners, it was reported Thursday.

Family-controlled Freedom Communications had planned to spend more than $500 million to buy back the roughly 45% stake held by Blackstone and Providence, the report in the Wall Street Journal's online edition said, quoting sources.

Freedom had intended to borrow from General Electric Co.'s GE Capital and others to fund the purchase, and the deal was nearly complete a few weeks ago, the report said.

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 of Freedom Communications, Blackstone, Providence and GE Capital were not immediately available for comment.

Irvine-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 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 Inc. and Gannett Co.

The report quoted sources as saying negotiations may resume in a few months. If completed, the deal probably would give the two private equity firms a return of around 15%, the Journal reported a source as saying.

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