Philadelphia Inquirer, April 25

Yucaipa brings Wall Street support for Inquirer-Daily News bid

By Joseph N. DiStefano
Inquirer Staff Writer

Yucaipa Cos. of Los Angeles has lined up Wall Street support for its possible bid for The Inquirer, Philadelphia Daily News and 10 other Knight Ridder papers.

Managing directors from Bear Stearns & Co. and SunTrust Robinson Humphrey joined Yucaipa representatives in visiting the Philadelphia papers April 24.

The Philadelphia papers and 10 other Knight Ridder Inc. dailies are being offered for sale by McClatchy Co., which plans to acquire the rest of Knight Ridder this summer.

Yucaipa is one of at least five investor groups that have expressed interest in the Inquirer and Daily News; each group includes financial partners as well as potential operators. The would-be buyers are scheduled to visit the papers on successive days this week.

Yucaipa was recruited as a possible buyer by the Newspaper Guild labor union, which represents part of the workforces at 8 of the papers. Yucaipa has expressed interest in all 12 papers. The Guild says Yucaipa would set up an employee stock-ownership plan that would, over time, acquire stock from some of the investors if the deal is approved by McClatchy.

Bear Stearns was brought in to help finance the deal if Yucaipa is successful in going after most or all of the papers, according to people familiar with the offer.

Bear Stearns' delegation was led by senior managing director John P. Fargis and managing director Ken Viellieu. Fargis in 2004 helped Trenton-based Journal Register Co. purchase a group of newspapers from New Mexico broker Owen Van Essen, who is selling six Midwestern papers. Viellieu heads Bear Stearns' Chicago investment banking office.

The Robinson Humphrey delegation was headed by Brian Combs, a Richmond-based banker who has headed deals involving Viacom Inc. and other big media companies, according to Securities and Exchange Commission records.

Fargis, Viellieu and Combs did not immediately return calls seeking comment.

Yucaipa's delegation included two associates at the firm, which counts the California and New York state workers' pension funds among its investors, and Robert O'Shea, a partner at the Los Angeles firm Latham & Watkins. O'Shea has represented Yucaipa in past transactions. Yucaipa did not send any of its senior officials. Yucaipa officials did not return calls seeking comment.

The group was also accompanied by two consultants who know the papers well: Yucaipa consultants Robert J. Hall, a former Inquirer and Daily News publisher; and James Naughton, a former Inquirer editor.

The group met with current publisher Joseph Natoli and other newspaper officials, and was scheduled to visit the company's Montgomery County printing plant in the afternoon.

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