NEW YORK (Reuters) – The publisher of The Philadelphia Inquirer and Daily News filed a $92 million reorganization plan on Thursday that it said would keep the papers in local hands and lead the company out of bankruptcy.
Under the plan, filed in federal bankruptcy court in Philadelphia, a group of local investors led by local real estate executive Bruce Toll would provide $52 million, including $35 million in new equity and the remainder in credit, Philadelphia Media Holdings said in a statement.
Other would-be owners include the Carpenters’ Union Pension Fund and Penn Matrix Investments.
The plan calls for creditors to be paid about $67 million in cash and downtown Philadelphia real estate, including the Broad Street offices where the papers are housed.
Creditors would get $37 million in cash and $29 million in real estate. Another $25 million would pay for costs related to its exit from bankruptcy.
The plan would, if approved, would wipe out about $300 million in debt.
Rival groups have 60 days to file their own reorganization plans, which would be subject to creditors’ votes and court approval.
Toll, one of the would-be new owners, was part of the group that former public relations executive Brian Tierney put together to buy the papers in 2006. McClatchy sold them after buying them along with the rest of Knight-Ridder Inc.
Toll is the vice-chairman and co-founder of luxury builder Toll Brothers Inc (TOL.N).
Philadelphia Newspapers LLC filed for Chapter 11 bankruptcy protection in February, blaming a dramatic fall in revenue, the economic crisis and its debt structure.
Other newspaper publishers including Tribune Co (TRBCQ.PK), the Minneapolis Star-Tribune and Journal Register Co (JRCOQ.PK), filed for bankruptcy as advertising revenue declines and more people get their news online for free instead of paying for it in print.
Journal Register emerged from bankruptcy this month.
The case is in Re Philadelphia Media Holdings LLC, U.S.Bankruptcy Court, Eastern District of Pennsylvania, No. 09-14315.
(Reporting by Phil Wahba. Editing by Robert MacMillan)