ENVIRONMENT : Toxic Waste Fears Delayed Freedom’s Newspaper Purchase
When Freedom Newspapers Inc. agreed to buy a group of weekly newspapers in Orange and Los Angeles counties for an estimated $20 million late last year, the deal was expected to close by the end of February. But soon March had past, and still Freedom had not reached a definitive agreement with the seller, Media General Inc. The contracts were finally signed April 8.
Such a delay would hardly be worth noting, except for the reason behind it: concerns over environmental liability. Freedom, it seems, wanted to be absolutely certain that it wasn’t buying itself a toxic waste nightmare along with Golden West Publishing Co., which publishes eight weekly newspapers in the South County, four in the North County and 10 in the San Gabriel Valley.
Golden West chief executive Ron Redfern said the concerns were focused on the company’s printing facility and headquarters in City of Industry. Solvent contamination had been discovered at a site Golden West had once leased next to its main plant, and Freedom wanted to be sure there was no repeat.
Redfern noted that the acquisition was a stock transaction and not just an asset purchase, so Freedom would be liable for any future cleanup obligations. The company therefore would not sign off on the deal until extensive soil sampling and other environmental testing had been completed and agreements had been reached on indemnification.
The astronomical costs of cleaning up toxic wastes--and a federal law which allows regulators to seek cleanup money from any company that has ever had anything to do with the site in question--has made environmental liability an increasingly important factor in the corporate acquisitions game.
According to the Wall Street Journal, environmental risk factors have scotched several recent buyouts, including a $660-million deal by the Sterling Group, a Houston-based leveraged buyout firm, to purchase a former Koppers Co. chemical business from Beazer PLC in 1988.
