Explaining Southern California's economy

Retirement fund, financing make OC Register sale more complex

OCR-Front

The Orange Country Register's parent company, Freedom Communications, has been acquired by a Massachusetts investment group.

Last week, an investor group called 2100 Trust LLC announced that it was acquiring the remaining assets of Freedom Communications, consisting of the Orange Country Register and six other papers, the largest of which is the Colorado Springs Gazette. The terms of the deal haven't been disclosed, but I took a stab at figuring out how much greeting-card mogul Aaron Kushner and his team of investors at 2100 Trust are bringing to the transaction.

My number is $156 million.

I also broke down the financing, which on its face doesn't look all that risky.

But there are some wrinkles to this deal. 

First, the LA Times reported, based on unnamed sources at the O.C. Register, that Kushner and his investors plan to "spin off" the six smaller papers. They intend to use the proceeds from these sales to finance the OCR purchase. By my math, assuming no premiums — extra cash — added to the deals, 2100 Trust could garner $44.5 million from these sales. That would get them more than halfway to buying the OCR, which I have priced at about $111 million, including a $40-million premium — a "Manchester premium," given that Doug Manchester probably overpaid by at least that much to buy the San Diego U-T.

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