The Breakdown

Explaining Southern California's economy

Orange Country Register sale to Boston-area investor closes

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The last pieces of Freedom Communications, including the Orange Country Register, have been sold to 2100 Trust LLC, an investment group led by Aaron Kushner, a Boston-area business man who initiated the purchase last month.

I took a stab at figuring out how big a deal this was, but no confirmation of my back-of-the-envelope math is forthcoming, as the deal size wasn't disclosed by Freedom or Kusher's group. The OCR's Mary Ann Mibourn did confirm an aspect of the purchase:

As part of the deal, Freedom Communications will make an additional one-time contribution to the company's retirement plan. The amount of the contribution was not disclosed.

This contribution was reportedly a dealbreaker for U-T San Diego owners Doug Manchester's ambitions to own two papers in Southern California. It could be a significant amount of money, beyond what 2100 Trust paid for the remnants of Freedom. As I wrote last month:

[T]here's the matter of a possible $100-million unfunded retirement liability that Kushner may have inherited from Freedom. This was evidently a dealbreaker for Manchester's effort to buy the OCR, as the U-T reported earlier this month:
U-T San Diego had been interested in acquiring the Register, but last week CEO John T. Lynch sent a memo to U-T managers saying that after nearly six months of negotiations, talks had been terminated.

“While there is a great fit and the consolidation benefits are obvious, there are complex issues related to the enormous, unfunded Freedom pension liability that simply could not be overcome,” Lynch said Monday.

Manchester paid $100 million to acquire the U-T from a private equity group in 2011. It's possible that he overpaid, but at least we're getting a fix on what newspapers in SoCal are worth.

This is important because Tribune Co. was just approved by a bankruptcy judge to begin the process of exiting bankruptcy. That means that the Los Angeles Times will soon be in the hands of Tribune's senior creditors, a group made up of L.A. private-equity firm Oaktree Captial, JPMorgan Chase, and newspaper distressed-debt specialist Angelo Gordon. There's a good chance they'll want to sell Tribune's newspaper holdings. So if we can get a sense of how much Kushner paid for the OCR, knowing how much Manchester reportedly paid for the U-T, we can start to think about how much the LATimes could be worth.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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