Will the Taylor group really be able to pull off a deal to buy back the Boston Globe from the New York Times Co.? Today’s Globe piece on Stephen Taylor’s quest to acquire the paper his family sold in 1993 reports that he’s having some trouble scaring up enough money. Beth Healy writes:
Some wealthy Bostonians spurned Taylor’s early overtures, wary of investing in what they consider a dying industry, according to people involved in the bid. With final offers due tomorrow, Taylor is still scurrying to raise money. He has to convince investors he has what it takes to make it in a radically shifting newspaper landscape, despite having been out of the business for nearly a decade.
That fits with information I reported two weeks ago, when I wrote that the Taylor group was still trying to line up investors.
Meanwhile, the Boston Herald’s Jessica Heslam reports that the price of purchasing the Globe and the Worcester Telegram & Gazette may have risen substantially. Both Taylor and Platinum Equity, the only other serious bidder, have reportedly offered to pay $35 million and to assume $59 million in pension liabilities. Now, though, Heslam quotes anonymous “insiders” who say that the esimate of pension liabilities has nearly doubled, to $115 million.
Hard to tell what’s going on here. Heslam quotes a Times Co. spokeswoman who says something that sounds vaguely like a denial, but not really. So, for the moment, let’s proceed under the assumption that Heslam’s sources are right. Will this kill the deal? Especially with the under-capitalized Taylor bid?
It’s possible that the Times Co. will be forced to eat some of that $115 million, like Theo Epstein getting rid of another overpaid, under-performing shortstop. Even though the Globe carefully notes that it’s “conceivable the Times Co. won’t sell the paper,” Poynter Institute media analyst Rick Edmonds recently noted that the Times Co. would lose substantial tax advantages if it doesn’t sell by the end of 2009.
It will be fascinating to see what gets announced tomorrow. That is, if there’s an announcement.
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Pension liability numbers are never an exact calculation. They are determined through an exhaustive number of complex calculations until a final number is issued by the particular pension plans which can take up to a year.
The early numbers that were published were about $85M in pension liability. Then someone in in their wisdom determined that the market was coming around and that liability could be estimated at $56M.
The pension plans provide estimates, the seller does estimates and the buyer does estimates. I am sure that during their due diligance process the buyers became aware of the liabilities and their real numbers. At the end of the day, it’s still a negotiation about and who can and who will pay what dollars.
I think the union should have a major concern, far beyond whether or not Dan has been abusive with a few thousand dollars.
The union should do everything legally within its ability to secure the pension liability now, in particular since it is so publicly exposed in the public domain.
Should any investment – or better described as speculative group, even if a member is of the esteemed Taylor family, make this acquisition and assumes all of the liability in payment, it is becoming obvious the debt exceeds the value of the assets, thus insolvent.
Should this group suffer losses, which is a likely case, the obligation will not be fulfilled in paying for services enjoyed by prior owners.
The total value offered at the moment is $94 million, insufficient to meet obligations, and even worse if NYT Company goes back to NY with $35 million.
It, too, is becoming more and more apparent that John Henry’s alleged offer to take it off their hands, may well have been and prove to be the last and best offer.
Unless the real estate and other assets salable at liquidation exceed in net amount of $100+ million, workers and former employees will be cheated. And that is a horrible violation.
wondering whether NYTCo mgt is now trying to offload some of the pension liabilities for its senior Globe management team (which I believe used to be tied to the mother ship) to the new owners rather than have to fund them from the big apple. That MIGHT be part of the reason for the escalating number.