Freedom Owners to Vote Informally on Sale Options
Shareholders of the media empire that owns the Orange County Register have begun an informal voting process to decide whether to sell the Irvine-based company or pursue other options.
During a meeting in Dallas this week, Freedom Communications Inc. shareholders heard from Morgan Stanley investment bankers, who presented five options that would allow some or all of them to cash out of the privately held company that owns 28 daily newspapers, 37 weeklies and eight TV stations.
The shareholders received informal ballots to vote on which option they prefer. The nonbinding ballots must be returned by Feb. 25 and will be tallied by Morgan Stanley. The Freedom board will meet March 5 and make a recommendation on which option to pursue.
The shareholders, almost all family members, are slated to vote on the board’s recommendation at the company’s regularly scheduled annual meeting April 25.
However, Tim Hoiles, grandson of company founder R.C. Hoiles and one of the largest stakeholders, is eager to move up the process and called for a special meeting, tentatively set for March 24, at which shareholders would vote specifically on a possible sale or merger.
“I’m not worried about the value of the company” decreasing, said Hoiles, who holds an 8.6% stake. “I’m worried about the people who work there and the family. This is affecting a bunch of people and we really need to show leadership and bring this to a conclusion.”
Hoiles wants the company or the family shareholders to buy him out, claiming that mismanagement is diluting his investment. In response, younger family members, who own less than 15% of the shares, have banded together to propose a buyout that would give them control.
Freedom Chief Executive Alan Bell said Hoiles’ new meeting raised questions, such as how many shareholders would attend and what role the board play.
“This is, in a sense, a competitive process,” Bell said. “Picking between two is not the same as picking between five choices.”
The five possible scenarios are:
* A recapitalization of the company, which would entail Freedom taking on more debt to buy out shareholders who want to sell their stakes.
* A sale, with Gannett Co., the McLean, Va.-based parent of USA Today, and McClatchy Co., the Sacramento-based owner of the Sacramento Bee, mentioned by analysts as likely candidates.
* A merger that would allow family members to retain some element of control.
* A complicated “split-off” that would divide Freedom’s assets between two groups: shareholders who want to continue to own the business and those who don’t.
* A first-time public stock sale, sources said.
Morgan Stanley says the value of the company may be as high as $1.7 billion, but values depend on which option is selected.
