Bad Timing | Bleader

Friday, September 25, 2009

Bad Timing

Posted By on 09.25.09 at 01:14 AM

Jeremy Halbreich, interim ceo of the Sun-Times Media Group, picked a bad day to explain the facts of life to his employees.

"This has been a challenging time for all," said Halbreich's memo, which purported to deal forthrightly with questions about the pending sale of the bankrupt company to financier James Tyree and his investors. "I want to be as straightforward as we can about where we are, and what could happen, rather than let erroneous rumors flourish."

From the memo:

Q. If the unions don’t vote for the amendments by September 29, what is likely to happen?
A. Getting all of the required union concessions is one of several conditions that must be met before the closing of the transactions contemplated by the Asset Purchase Agreement that we filed with the Bankruptcy Court in Delaware. September 29th is an important deadline that has been set by the Buyer of our assets. If we don’t have all of the required union amendments by that time, the Buyer has said that it will not close on the transaction since this important condition to the sale will not have been met. This would likely lead to the other interested parties in the bankruptcy (IRS, U.S. Trustee, UCC) quickly moving to convert our bankruptcy case to a Chapter 7 Liquidation on or before October 8, the date on which the final sale hearing is currently scheduled. Any such conversion would preclude the possibility of a sale.

And then again:

Q. Can the unions [that initially rejected Tyree's terms] re-vote by September 29?
A. Yes, they have the opportunity if they choose to do so, but all 18 of our bargaining units must vote in favor of the required contract amendments no later than the September 29 date established by the Buyer.

And further on:

Q. Why is it up to the unions to decide if we stay in business?
A. The Buyer established that several cost reduction and work-rule flexibility conditions be met before agreeing to buy the Company. Since these conditions represent changes to the existing union contracts, the conditions must be voted on and approved by the respective union memberships. All of these conditions have been met except the cost reduction amendments to the collective bargaining agreements. The union groups have until September 29 to approve these amendments. These amendments are vital to allowing the Buyer to successfully transform our business in a changing news and information environment. The status quo is no longer acceptable or financially viable.

Meanwhile, in Delaware, bankruptcy judge Christopher Sontchi was asserting that September 29 is no sort of deadline and accusing management of "posturing" in insisting it is. This excellent report from the Tribune explains that unless Tyree wants to forfeit more than $1 million, he cannot walk away from his offer of some $25 million for the company until December. According to the Tribune, "Tyree and Halbreich acknowledged that the Sept. 29 date was not contractual. They chose it because it coincided with the date of non-union pay cuts and because they wanted to keep the heat on given the company's financial condition." Halbreich told the Tribune he would not apologize for "focusing people's attention on the issue at hand."

As the issue at hand is the life or death of the company and the fate of hundreds of jobs, it's absurd to think this focus required a dollop of mendacity to achieve. The company seems to have set up some sort of good-cop, bad-cop approach to its conversations with the Chicago Newspaper Guild. There's Ted Rilea, the vice president of labor relations, whom Tom Thibeault, the guild's executive director, talks to daily and calls a "very honorable person...fair, honest, not deceitful in any way." And there's Halbreich, who now has Thursday's "straightforward" memo to live down.

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