Hopeful Suitors Lining Up for Macmillan

Even as the public glare focuses on the life-or-death struggle of the New York Daily News, another drama is unfolding quietly as investors map plans to grab choice Macmillan Inc. assets from the wreckage of the Maxwell publishing empire.

While Maxwell Communications Corp., the British company that owns the U.S. publisher, has not yet listed any of its properties for sale--and legal obstacles to their transfer abound--potential buyers Friday were quietly sifting through what information was available to prepare for the seemingly inevitable sale of all or part of Macmillan.

Analysts and industry sources said possible buyers include Kohlberg Kravis Roberts & Co.’s K-III Holdings Inc. partnership; Trefoil Capital Investors, an investment fund created by Roy Disney; Paramount Communications Inc.; Bertelsmann, and Reed International.

In other developments related to the former holdings of Robert Maxwell, who disappeared from his yacht and was found floating dead in the waters off the Canary Islands last month:

* Daily News Publisher Kevin Maxwell disclosed that newsprint suppliers were demanding cash on delivery in the wake of the newspaper’s Chapter 11 bankruptcy filing Thursday. He also said the tabloid had enough paper to last the month and is seeking a capital infusion.

The News has formed a committee, including two union representatives, to study the paper’s finances and attempt to come up with a rescue plan that would share ownership with employees.

* News Vice President Sheldon J. Aboff, in an affidavit, said the paper “faces a liquidity crisis and does not have the financial resources to weather the storm without court protection.”

* Pearson, the British firm that publishes the Financial Times, said it was interested in buying Maxwell’s flagship newspaper, the Daily Mirror. So did the newspaper’s management.

* The Mirror declared Robert Maxwell a “liar” in a screaming Page One story Friday, while Britain’s Serious Fraud Office raided his headquarters searching for evidence about the disappearance of hundreds of millions of dollars in Mirror funds.

The fraud squad drove off in a truck stuffed with boxes of documents after spending several hours in Maxwell’s offices.

* The mystery surrounding $265 million in Berlitz International stock missing from Macmillan deepened, as the company said the stake--which was to have been sold--appeared to have been transferred out of its control. About $900 million is also believed to have vanished from various Maxwell pension funds.

* The Financial Times disclosed that Maxwell’s sons, Kevin and Ian, were jointly responsible with their father for making loans to their private companies from the pension plan of Mirror Group, the publicly held British company that publishes the daily and Sunday Mirror newspapers. Kevin, in New York, declined comment, citing pending investigations.

Debt-burdened Maxwell Communications was selling off Macmillan assets at a rapid clip even before the company’s founder died last month. Still, “there’s quite a bit left,” said Jim Milliot, editor of BP Report, a Wilton, Conn., newsletter about the book-publishing business.

Among the most prized assets, he said, were Macmillan’s college textbook division, the nation’s eighth largest with sales of about $123 million, and its 50% interest in Macmillan-McGraw Hill School Publishing Co., the nation’s largest text publisher with sales of $557 million.

Macmillan’s trade book division is less valued, in part because the business is in a slump and in part because “Macmillan has never been known as strong trade house,” said John F. Baker, editor of Publishers Weekly.

However, sources said, Macmillan’s Scribner’s and Atheneum imprints will likely draw buying interest because of their strong back lists. Scribner’s back list includes the novels of Ernest Hemingway and F. Scott Fitzgerald.

Still, a spokesman for one potential buyer said uncertainty remains the order of the day. “Nobody knows what’s going on, and the situation changes hour by hour. It’s like the breakup of the Soviet Union.”

Times staff writer Victor F. Zonana reported from New York and correspondent Jeff Kaye reported from London.