FLS assets will be auctioned in May
RICHMOND—The Free Lance–Star Publishing Co.’s assets are scheduled to be auctioned off in May as part of the media company’s Chapter 11 bankruptcy case.
Attorneys for the FLS and its secured creditor, Sandton Capital Partners, laid out the timeline for the asset sale during a short hearing Thursday in front of U.S. Bankruptcy Judge Kevin R. Huennekens.
Almost 20 potential bidders have already signed nondisclosure agreements expressing interest in the company’s assets, FLS attorney Paula Beran told the judge. Thirteen of them are actively looking through company financial data to evaluate a potential bid. One interested party visited the FLS this week.
The company’s assets include the newspaper, fredericksburg.com, Freelancestar.com, WFLS, WVBX, WWUZ, WNTX, Print Innovators, several real estate properties in the city and additional digital products.
The formal bidding process will occur over the next two months. Potential bidders are primarily working through the company’s financial adviser, Suzanne Roski of Protiviti Inc.’s Richmond office.
Interested parties have until May 9 to submit a bid, according to the timeline set forth Thursday. The auction will be held May 15, and a sale hearing is expected May 22.
The assets are expected to be sold officially by June 20, followed by a second closing to sort out transfer legalities with the Federal Communications Commission.
A key factor in how the bidding plays out will be how much of a credit bid Sandton is allowed to submit. Attorneys for each side have been negotiating that issue, and a March 24 hearing is scheduled to settle the matter.
Credit bids are frequently used in bankruptcy court. They typically allow secured lenders to bid the amount they are owed without putting up any additional cash.
Sandton last summer purchased a loan from BB&T that had been made to the FLS in 2007 to build Print Innovators, a state-of-the-art commercial printing plant on Belman Road in Fredericksburg. Sandton then advised the FLS to file for bankruptcy.
The loan balance is now about $38 million. Most of the FLS’ assets and earnings were pledged as collateral for the loan. It’s unclear how much Sandton paid BB&T for the loan. The firm has declined to provide that number.
The FLS, which remains profitable, never missed a loan payment to BB&T, but fell out of compliance with an agreement governing the ratio between earnings and debt. The FLS tried to refinance the loan and sell the company, but it wasn’t able to command a price acceptable to BB&T.
Other than Sandton, the FLS has just one significant creditor: the Pension Benefit Guaranty Corp., due to an underfunded pension obligation of about $5 million. That federal agency could take over the pension plan during the bankruptcy process after the assets are sold, meaning the new owner wouldn’t inherit the plan.
If the PBGC takes over the fund, all but a few current and past FLS employees would receive their full pension benefits and the others would get most of their benefits.
The FLS is now operating as normal inside bankruptcy protection. The company brought in about $35 million in revenue in 2013, according to court documents, down slightly from 2012.
Bill Freehling: 540/374-5424