Sun-Times unions agree to concessions

Thane Ritchie, the Lisle equity manager who wants to extend the court deadline to bid on the beleaguered Chicago Sun-Times, has faced his own financial woes in recent years.

Two of his Ritchie Capital Management funds filed for bankruptcy protection in 2007 after they lost about $700 million related to an alleged fraud by then-partner Coventry First LLC.

In 2008, the U.S. Securities and Exchange Commission filed a $40 million settlement with the firm, Ritchie and another employee for charges of illegal late trading schemes.

And there's a case pending in Cook County Circuit Court where Barclay's Bank PLC filed a lawsuit in 2008 charging that Ritchie Capital concealed more than $150 million in investments with Petters Group Worldwide and its affiliates.

So how can an equity firm, with its own legal battles, mounting bills and financial concerns, want to buy Chicago's No. 2 newspaper, which is also losing money thousands of dollars daily? Because he wants to preserve such legacy newspapers, said Ritchie spokesman Justin Meise.

He's also bidding on other struggling newspapers nationwide. But Meise won't disclose which ones.

In fact, he won't disclose what a potential purchase price would be for the Sun-Times Media Group or even what Ritchie's assets are at this time, either. Reports show that Lisle-based Ritchie Capital Management, with offices in New York and California, had $4 billion in 2005, but dropped to about $2 billion in 2008.

The bidding for the Sun-Times properties closed Monday in U.S. Bankruptcy Court without any other formal bids, except the pending bid by Mesirow Financial Chief Executive Officer James Tyree and his group of investors. Tyree has bid $5 million in cash and more than $22 million in assumed debt and other liabilities. The Sun-Times and its 50 other newspapers throughout the suburbs, Joliet and Gary, Ind., are on the block as it reorganizes under Chapter 11 bankruptcy.

Its future could hinge on what transpires at a court hearing Thursday.

Meise said that Ritchie met with the union leaders on Wednesday morning and they are expected to ask the creditors committee to file a motion to extend the bidding period another 30 days. This extension would allow Ritchie to prepare his bid, Meise said.

Ritchie claimed late Tuesday that despite a request to set up a meeting with the Chicago Newspaper Guild before the deadline had been "blocked." "Ritchie was told that it was against Federal labor laws for a potential bidder to have a conversation with the Guild," his statement said.

Just after Ritchie surfaced, the Sun-Times union met on Wednesday and tentatively agreed to Tyree's concessions. The updates will be presented to the union membership tonight at the Holiday Inn in downtown Chicago.

Tyree told the Daily Herald late Tuesday that he provided a memorandum that had clarified some so-called misinterpretations.

"There's been a whole lot of misinterpretations on what my requests have been," Tyree said. He declined to elaborate on what those were.

Published reports have said that Tyree is seeking a 15 percent permanent salary rollback, freezing pension funds and dramatically changing the rules on severance and seniority.

Tyree said he has remained consistent on his bid and on the concessions being sought from the company's union members.

The union's executive director Tom Thibeault and unit chairmen Misha Davenport and Bob Mazzoni did not return phone calls. Sun-Times Publisher John Barron and spokeswoman Tammy Chase also did not immediately return calls.

So was Ritchie just a stalking horse to pressure the union into agreeing to concessions? Anything's possible, said newspaper analyst John Morton, president of Morton Research Inc. in Silver Springs, Md.

"The likely thing is the union had an unknown quantity and didn't know what Ritchie would do," said Morton. "They apparently have some confidence that the other bidder (Tyree) has the newspaper's best interest at heart."

Meise declined further comment until after Thursday's court hearing.