Creative Loafing Auction Ends With New Owner For CL
While it fell short of the drama of the Nabisco takeover portrayed in Barbarians At The Gate, the battle for control of Creative Loafing in the bankruptcy court auction was certainly not boring. On one side of the bidding was recent CEO Ben Eason, whose parents founded the company in 1972. On the other was New York hedge fund Atalaya that had loaned the paper $30 million for CL’s acquisition of the Chicago Reader and the Washington City Paper.
After a year in bankruptcy proceedings Judge Caryl Delano set yesterday as D-Day for the equity auction. Atalaya won with a cash bid of $5 million which dwarfed Eason’s bid of $2.3 million of which over half was comprised of “in-kind contributions”. Despite the huge disparity between the two bids the CL attorneys made the case that it was in the best interest of the company to leave control with current management as they would not break up the company and that the judge should consider the roles played by the employees and the papers in their respective communities. At the end of the day, Judge Delano, who said that she has read the paper for years, ruled in favor of Atalaya. As far as the future of the paper in Atlanta, Atalaya informed the court that it intended to reinvest in the paper and to add members to the board who possess significant national journalism experience, including former LA Times editor Jim O’Shea.
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