The state’s retirement system, which last week entertained an offer to become an investor in the purchase of Blethen Maine Newspapers Inc., has decided against the deal.
Richard Connor, the man who has been working for a year to purchase the company, which includes the Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal in Augusta, the Waterville Sentinel and other publications, said Tuesday that he is pursuing other options and remains “confident that we’re going to buy these newspapers. This decision is not fatal to our deal in any way.”
According to an e-mailed memo from Peter Leslie, chairman of the retirement system’s board of trustees, to the rest of the board, the deal does not fit the purpose of money in the system’s fund that is earmarked for private investments.
“The committee, our investment staff and our consultant for private equity do not recommend our participation for several reasons,” wrote Leslie in an e-mail provided by State Treasurer David Lemoine, who is a member of the board. “This acquisition is likely to be more appropriate for private-sector investors.”
Leslie also wrote that a privacy clause between Connor and the Blethen company prevented the public airing of specific terms of the deal “that would enable us to analyze the merits of the investment.”
Connor, owner of the Wilkes-Barre Publishing Co. in Pennsylvania, approached the board March 12 with Peter Brodsky, a partner with a firm called HM Capital of Dallas, Tex. They sought $10 million in private capital from multiple investors and did not say during the meeting how much they were requesting from the retirement system.
“This has no effect on our deal,” said Connor March 17 during a telephone interview. “The retirement system was one of the sources we were talking to and we think it represented a great investment for the pension system.”
Andrew Sawyer, the retirement system’s chief investment officer, said the fund has about $350 million earmarked for private investments, but is seeking limited partnerships where its investment will be spread among perhaps 10 to 20 companies.
“A general partner would be finding investment opportunities and doing the due diligence,” said Sawyer, who estimated that since the private equity fund was established in June 2008, “between 20 and 50” private equity firms have been considered. So far no deals have been struck. Sawyer expects to approach the trustees with one or more deals within the next six months.
“I don’t anticipate in the near term, certainly not in the next year, bringing a single company investment idea to the board,” said Sawyer. “At some point as the program matures, we may consider making direct investments, but at this point the board has not indicated a willingness to do that.”
Sawyer stated that the rejection of the deal has nothing to do with the merits of the investment in the Blethen company, but rather because it’s not a “good fit.”
“We certainly wish Mr. Connor and HM Capital the best of luck,” he said.
Leslie wrote that the matter could be placed on the board’s April agenda for discussion, but Sawyer said at this point, “this is the end of the story.”
(Statehouse News Service)
