Firms purchase part of Freedom

0 Comments | Gazette, The (Colorado Springs), May 19, 2004 | by WAYNE HEILMAN THE GAZETTE

Two East Coast investment firms Tuesday bought 40 percent of Freedom Communications Inc., parent company of The Gazette and related businesses.

Blackstone Group of New York and Providence Equity Partners of Rhode Island hold four of the 13 seats on the company's new board of directors, but the $2 billion deal keeps control of the company in the hands of the family of Freedom founder Raymond C. Hoiles.

The transaction allows the Irvine, Calif.-based company to keep its management team in place, provide capital for future acquisitions and growth and retain the libertarian editorial philosophy of its 65 newspapers, Freedom Chief Executive Alan Bell said.

"This deal serves a number of people's purposes. It allows those who want to leave to do so at a hell of price and allows those who want to stay to do so," Bell said. "We are now in excellent position to operate and expand the company with a unified ownership group."

Blackstone and Providence are expected to remain investors in Freedom for longer than the three years that is typical of such transactions, Bell said.

When the investment companies sell, Freedom could raise money through a public offering, merge with another media company or seek other investors, he said.

About 58 percent of Freedom's shareholders sold their stock, but the company borrowed nearly $1 billion to buy back shares so Freedom would remain in family control, Bell said.

The debt also refinanced existing loans and provided cash for acquisitions, he said.

"This is a larger amount of debt than we have carried in the past, but the company has not used debt at the most efficient level," Bell said. "We are accustomed to managing debt. This debt is within the (average) range of media companies of this size."

Tim Hoiles, a Freedom board member who had been one of the most vocal in pushing for a buyout, declined to comment on completion of the deal. Hoiles, who lives in Colorado Springs, is not a member of the new board and previously said he would sell his 8.6 percent stake in Freedom.

Robin Hardie, a Springs resident who has worked at The Gazette and the company's national sales office here, was named to the new board as one of four Hoiles family members on the board, which also includes four independent directors and Bell.

Freedom's previous board accepted the Blackstone-Providence bid in October, and it was approved by shareholders in December. The deal, which includes eight television stations, was completed Tuesday after gaining Federal Communications Commission approval.

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