The Political Whore

The Creative Loafing chain is in a Tampa bankruptcy court hearing today as owner Ben Eason tries to fend off his biggest creditor, which wants to take ownership of the chain and says it has “lost confidence” in Eason’s management.

Atalaya Capital Management LP, an investment fund that is owed $31 million from financing CL’s 2007 pay-down of debt and purchase of the Chicago Reader and Washington City Paper, said in court this morning that it would continue to operate the newspaper chain “as a going concern” and put more dollars into it rather than get rid of it in a fire sale.

Atalaya partner Michael Bogdan testified that the firm has hired another investment banking firm with media experience, Bulkley Capital of Dallas, Texas (with an office in Atlanta, the home of CL’s largest newspaper) to advise it and provide “management assistance” in running the CL papers if it is successful in court today. That firm’s founder, Brad Bulkley, has strong media experience, Bodgan said. Bulkley’s website describes it this way:

Brad began his career at Harris Trust & Savings Bank as a commercial lender to middle–market companies in the Midwest. He went on to form and manage one of the largest communications lending divisions in the country at what is presently Bank of America in Dallas. There, Brad was responsible for overseeing the communications lending activities of the parent and sixty–eight affiliate banks. While heading the media lending group, he was responsible for structuring and agenting what, at the time, was the largest acquisition and credit facility in broadcasting history. Under his leadership, the bank’s media effort went from a start–up to the fifth largest communications lender in the country in less than four years. While it was exciting to read about his deals in the national news, the formation of Bulkley Capital enabled Brad to return to the segment of the market he served when at Harris Bank, which he found to be even more gratifying – working closely alongside entrepreneurs, middle–market and family–owned companies to build their businesses for the next generation.

Bogdan said his investment firm would be willing to spend more money to increase revenues at the newspaper chain, but only if it can displace the current management and ownership. He said Bulkley is familiar with alt-papers and advised the Chicago-DC paper owners in their 2007 sale to CL. Bogdan said Atalaya would seek to publish “a quality publication” in order to maximize its investment. He also said the lender is concered about the CL workers. “We’re concerned with the morale of the employees,” a fact Bogdan said he gleaned from “reading in blogs.” Federal Bankruptcy Judge Caryl E. Delano disallowed the blog-related testimony after an objection from CL’s attorney, David Jennis.

The hearing likely will go on all day, with experts from both sides giving testimony about the value of the company, whether it has dropped and why.

Posted in Media Watch | Leave a comment