Harry Hoiles Sweetens His Offer to $700 Million : Freedom Newspapers Ante Raised

Harry H. Hoiles increased his offer Tuesday to take over Freedom Newspapers of Santa Ana by about $14 million, to a total of $700 million, for the shares of the closely held company that he does not already own.

The cash offer of $98 per share, made through his recently formed Independence News Corp., is $2 a share higher than Hoiles’ first offer, which was rejected by Freedom Newspaper directors Aug. 29. The company publishes the Orange County Register and 28 smaller newspapers and also owns four television stations.

The latest bid by Hoiles may meet a similar fate.

“We are not interested in selling,” said Robert C. Hardie, Freedom Newspapers chairman. “We had polled all the stockholders (other than the Harry Hoiles family) and they rejected the idea of selling, and I’m sure money is not the issue,” Hardie said. The remaining two-thirds of Freedom Newspapers stock is held by members of two other branches of the Hoiles family.

Hardie said he did not know when the directors would act on the new offer.

Like the earlier offer, the latest one would pay cash raised through loans that would be paid back from the company’s cash flow and, possibly, sale of some assets, said Peter Kent, an investment banker with Henry Ansbacher Inc. of New York, which is representing Harry Hoiles.

Hoiles, one of three offspring of Freedom Newspapers founder Raymond Cyrus Hoiles, has been locked in a dispute with the other two branches of the family over the direction of the company for five years.

Sued by Nieces

His latest offer came a day after he was sued for $1.5 million by three nieces, the daughters of his brother, Clarence, who died Dec. 31, 1981.

In the lawsuit, the nieces claimed that Hoiles, who succeeded Clarence as trustee of a trust in which they have an interest, mismanaged the trust by using it to gain corporate information in his dispute with the other heirs, including themselves. They also claimed that he breached his fiduciary duty to them by filing a lawsuit in April, 1982, to dissolve Freedom Newspapers, which is the major asset of the trust.

The latest offer by Harry Hoiles, put together by investment bankers Drexel Burnham Lambert along with Henry Ansbacher, is for all of the company’s shares, even though his family already owns or controls a third of them. The nominal value of the entire offer is about $920 million.

The value of the company as a whole is important in the dissolution lawsuit, which is scheduled for trial in Orange County Superior Court on Jan. 20, because it would determine how much money Harry Hoiles would get if he succeeds in the lawsuit--or sells out to others.

No serious negotiations to buy Harry Hoiles’ shares have yet taken place, Hardie said.

If Freedom Newspapers directors reject the latest offer, Kent said, Harry Hoiles most likely will try to sell his family’s shares privately or look for another corporation to join him in a takeover bid.

“A corporate buyer would recognize the value and the potential of Freedom Newspapers and has deeper pockets and can wait longer,” Kent said. “There is an aging group of shareholders in control, and, as control of those shares passes from one generation to the next, history has shown that attitudes toward retaining or selling also changes.”