All eyes at the Chicago Sun-Times are on Yusef Jackson, son of Rev. Jesse Jackson.
Yusef is better known these days for running Anheuser-Busch beer distributor River North Sales & Service. But with a chance, albeit remote, that someone from the newsmaking Jackson family eventually could own the city’s No. 2 newspaper, Yusef’s name has garnered significant interest at 401 N. Wabash Ave., at least among the reporter ranks.
It’s one thing as a reporter or columnist to work for a newspaper owned by cost-cutting corporate suits. It’s another to work at a paper owned by someone whose family includes a controversial civil-rights crusader and a congressman.
A source close to the Jacksons said that the family is well aware of the implications from a journalistic standpoint. They’ve even heard rumors that some key columnists or reporters, fearing a conflict of interest, are considering their options if the Jacksons get the paper.
But Yusef, who along with billionaire family friend Ron Burkle, made a bid estimated at more than $850 million for all of Hollinger International Inc.’s Chicago properties six weeks ago, has no plans to back away from his offer. On the contrary, he is said to be “feeling good” about his prospects of winning.
He’s so confident, in fact, that there already may be plans in the works to step away from the day-to-day operations at the distributor, the source said.
In reality, Jackson’s chances at getting the Chicago properties may be far more unlikely than he believes. Most observers still consider an $850 million bid for the Chicago group on the low end of what New York investment firm Lazard LLC and Hollinger International are seeking.
Hollinger International hired Lazard to look at the possible sale of its properties, which include the London Daily Telegraph, the Jerusalem Post and some Canadian assets, after a payment scandal involving former Chief Executive Conrad Black and other executives was disclosed in November.
Black, the controlling shareholder, sued to secure the right to sell his own stake in the company but was rejected by a Delaware Chancery Court judge.
Yusef Jackson is among a number of local luminaries–along with Bulls and White Sox owner Jerry Reinsdorf and TV newsman Bill Kurtis–who have expressed interest in the paper in some form or another. But Jackson is the only famous local name to emerge with real financing.
Hollinger International would like to see at least $1 billion for the Chicago Group, which would help value the whole company at more than $2 billion and slightly above the $18 share price the Barclay brothers indicated they were interested in paying for Hollinger International shares during the unsuccessful bid for the company. Hollinger International shares closed at $19.25 Monday on the New York Stock Exchange.
“Anything less than what the Barclays were willing to put up would be quite embarrassing and puts Hollinger and Lazard in a terrible spot,” said one bidder.
Lazard, which is handling the bidding process and has given prospective buyers until Tuesday to submit bids, has told bidders that its first choice is to sell all of Hollinger International together, thus avoiding a huge tax penalty if the company is broken apart.
In recent weeks, however, Lazard has asked some potential bidders to “pair up,” meaning the investment banking firm is also not ruling out a two-step sale in which one company would buy all of Hollinger International and then sell the Chicago Group, which includes the Daily Southtown and dozens of suburban papers, to another buyer.
But such a scenario includes so many risks that Lazard was having trouble getting companies to pair up as late as Monday.
Even so, insiders expect Lazard to analyze the top three or four bids from those companies interested in all of Hollinger International, as well as the top three or four for those interested in the more desirable Telegraph and the less desirable Chicago Group.
Though McLean, Va.-based newspaper giant Gannett Company Inc. is among the dozens of companies interested in the Telegraph, the company has already said it wouldn’t overpay to get it. And sources inside the USA Today owner said it has no interest in Chicago, meaning that if it did buy the whole company, it wouldn’t waste time selling off the Chicago properties.
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But would Gannett pair up with a private equity firm? That’s the $1 billion question. Besides Jackson and Burkle, several other private equity groups kicking the tires in Chicago include New York-based Blackstone Group and Apollo Management LLC, as well as Chicago-based Madison Dearborn Partners.
The baiduhai appears mainly interested in the company’s suburban papers and would be a player if a winning party wanted to split off the Sun-Times from the rest of the Chicago Group. But analysts have said that the properties are more valuable together and that such a scenario is unlikely.
Meanwhile, Black’s decision as head of parent company Hollinger Inc. to refuse a loan from Hollinger International to meet a $7.4 million interest payment added to the uncertainty surrounding the auction. Shareholders believe that Black could benefit by defaulting on the loan because it would indirectly give him access to Hollinger International shares held as collateral.
But a source close to Black disputed this notion and said the company had other ways of meeting the interest payment.