Older Hoiles family members would be swept off Freedom Communications Inc.'s board and the parent of the Orange County Register would triple its debt under a plan to allow shareholders to sell their holdings, Freedom disclosed in a proxy statement delivered Wednesday.
A vote on the proposal is scheduled for Dec. 17. In the meantime, the four dozen adults who will vote the shares held by some 90 family members will hold an information meeting Dec. 8 to discuss the deal, which would bring in two East Coast buyout funds as partners in the family-owned business valued at about $1.7 billion.
It is not known how much of the company might be sold. However, Timothy C. Hoiles, who led the movement to allow shareholders to cash out, said he estimates that 52% to 65% of Freedom's 7.8 million shares could be tendered.
Even if family members sell more than half their shares, the family would be guaranteed control of Freedom's voting stock, the Register's libertarian editorial voice, and chairmanship of the board. Blackstone Group and Providence Equity Partners, the new investors in Freedom, initially would be able to own up to 49.9% of the voting stock.
Under the proposed restructuring, a long-dominant cadre known as the "Three Ds" -- Chairman R. David Threshie, corporate secretary Richard "Dick" Wallace, and Freedom publisher Douglas Hardie -- would leave the board. So would their frequent antagonists, Colorado Springs, Colo., businessman Tim Hoiles and Sacramento investor David Hardie.
In place of these third-generation descendants of founder R.C. Hoiles would step four from the fourth generation: Thomas S. Bassett, who initially developed the idea of partnering with Blackstone and Providence; Robin J. Hardie, David D. Threshie and Raymond C.H. Bryan.
Only Bryan is on the current board. He declined to comment, saying his relatives would speak about their plans at a later date. On the reconstituted board, Bryan and his cohorts would join four directors from the investment firms, four independent directors and Freedom's CEO.
Among the details disclosed in the proxy:
* While Blackstone and Providence would pay $220 a share for Freedom stock, as previously reported, shareholders would receive an anticipated $212.71 for each share sold. The difference would go to buy out outside partners that own some of Freedom's 65 newspapers.
* Freedom's long-term debt, which stood at $332 million on Sept. 30, would jump to about $1 billion to provide cash to pay shareholders wishing to sell. The proxy said the heavy debt could potentially make it harder for the company to pay dividends and repurchase shares as the plan envisions.
* If Blackstone and Providence increase their stakes to more than 70% they can take control of the company.