The Newspaper Guild membership of the Sun-Times meets at 6 PM Tuesday and may vote to accept reject the harsh terms presented by the management of the Sun-Times Media Group as the price that must be paid if the company is to continue to exist.
But a Guild source says a vote isn't inevitable. Interim CEO Jeremy Halbreich told the Sun-Times membership Monday that he'd take any meaningful counteroffer to James Tyree, the financier who put together the group of investors buying the media group. So Tuesday's meeting could result in a counteroffer instead, or a conditional vote to reject Tyree's terms coupled with the union's own proposal.
The Guild source said the union was under the impression that — according to Tyree himself — a single no vote by any of the unions representing STMG employees would torpedo the sale. But on Monday the Guild unit at the Post-Tribune in Gary voted 17 to 1 against making the concessions Tyree seeks, and yet as far as anyone could see Tuesday, the sale remained untorpedoed. Then again, the Post-Tribune is a special case. Guild leaders there are angling to buy the paper from the STMG under an ESOP and run it themselves. The Guild source in Chicago wondered if the Gary Guild leadership calculates that if the STMG is liquidated, the Post-Tribune might fall into their laps.
On Tuesday Halbreich was visiting outlying STMG newsrooms to make his case for the concessions — a case he also stated in an email to the company's employees. "If our union colleagues do not approve the required amendments, the Buyer will withdraw its bid to purchase the assets of the Company," he warned. And the buyer, financier James Tyree and a group of investors he put together, is the only game in town."No other bidder has emerged who will purchase our assets. If the current Buyer withdraws its bid, we will shortly run out of cash and we will be forced to shut down all of our publications and Web sites and liquidate the business. This will result in the loss of all 1,800-plus jobs across the Company."
Here's the entire memo:
Last week we announced the exciting news that a group of Chicago investors have made a bid to purchase our Company’s newspapers, Web sites and other assets.
This very positive development and outcome is what we have all been working so hard towards over the past 5-6 months. It represents a tremendous step towards a bright, long and economically healthy future for the Company and it will save and secure our jobs. In addition, this will serve to move us away once and for all from the Company’s troubled legacies of the past.
This future is not guaranteed, however. Each of us has been asked to make sacrifices to ensure that the deal with this Buyer can get done. Over the past weeks and months, our non-union colleagues have been informed of the changes to their compensation that will be required. Our unionized colleagues have been informed of the amendments to their collective bargaining agreements that the Buyer has required to complete the deal, and they are voting on these amendments over the next two weeks.
I am writing to all our employees — both union and non-union — to explain as clearly and succinctly as I can what is at stake here.
If our union colleagues do not approve the required amendments, the Buyer will withdraw its bid to purchase the assets of the Company. And, they will do so for very understandable reasons since the Company will still be losing far too much money for any reasonable investor to underwrite. Neither you nor I would choose to invest our own monies any differently.
No other bidder has emerged who will purchase our assets. If the current Buyer withdraws its bid, we will shortly run out of cash and we will be forced to shut down all of our publications and Web sites and liquidate the business. This will result in the loss of all 1,800-plus jobs across the Company.
To our fellow employees who are represented by the 18 collective bargaining units here at the Company, I cannot put it any more plainly than this. You have two choices with long-term consequences.
If you APPROVE the Amendments, you will satisfy the most important condition for the Buyer to purchase our newspapers, Web sites, and other assets, thereby securing a bright future for our newspapers and Web sites and saving 1,800 jobs across the Company.
If you REJECT the Amendments, the Buyer will withdraw its bid to purchase our Company’s assets. Consequently, all of our newspapers and Web sites will be shuttered and all 1,800 jobs across the Company will disappear.
It is thanks to the sacrifices and dedication of all of our employees that we reached the goal of having a potential Buyer who is willing and able to take our business into the future. We could not have succeeded without you and going forward we cannot succeed without your continued support. We need every single employee, union and non-union, to embrace change and to continue to make the sacrifices that are necessary in what is a very challenging and transforming industry. We can no longer afford the high cost structure of past years. Our own economic realities dictate likewise and the proposed Buyer has challenged management and challenged all STMG employees to take the remaining steps necessary to transform our Company and our business into a financially, self-sustaining position after many years of operating losses.
We are now at the critical juncture and decision point for the health and survival of our Company, for the preservation of our newspapers and Web sites and we stand at the final opportunity and hurdle to secure as many jobs across the Company as possible.
But in order to bring the business onto sound, financial footing and secure the long-term
future of our newspaper and Web site brands, we must collectively eliminate the remaining amount of the weekly cash burn rate that still exists at the Company. When we started this process last April, the cash burn rate was in excess of $1.5 million each week. Through hard work and collective effort, we are now operating at a cash burn level of between $200,000 and $300,000 each week.
We have recently implemented a series of revenue enhancement and expense control initiatives designed to eliminate the cash burn completely. These actions will return the Company to an operating cash flow neutral position, which will enable us to secure a future for our business. These initiatives include pricing actions in advertising and circulation, the closing of the Northfield production facility and outsourcing the printing of the Pioneer Press newspapers, the conversion of several of our newspapers to the tabloid format, the wage reduction announced to all non-union employees last week, and the requirement that all 18 bargaining units at the Company representing our union employees agree to extend for three years the original 15% reduction in total compensation that has been in effect since last April/May along with a set of work rule changes. All of these initiatives have been accomplished or are in process, except for the amendments to the union contracts, which require the approval of the union members.
If we do not implement the union cost-reduction initiative, the Buyer group will withdraw their bid to purchase the assets of the Company. This condition imposed by the Buyer is included in the formal Purchase Agreement filed with the Bankruptcy Court last week.
It is also very important for you to understand that no other bidders for the Company’s assets exist today. The Buyer that signed the Purchase Agreement last week is the sole surviving bidder from the many who earlier had reviewed the financial performance of our Company over the past five months.
Since no other bidders exist, if we fail to consummate the sale to this Buyer, we will shortly run out of cash and we will likely be forced to shut down all of our publications and Web sites and liquidate the business.
And further, if we fail to successfully consummate the sale, it is very likely that one or more interested parties in our bankruptcy case will file with the Court to immediately convert our case to a Chapter 7 Liquidation from the current Chapter 11 Reorganization. Once again the end result will be the closure of our newspapers and Web sites and the loss of all 1,800 jobs across the Company.
I know all of you have already sacrificed to get us to this final juncture and this final opportunity to secure our future with a committed group of new investors. Across our Company, everyone has demonstrated extraordinary dedication, hard work and commitment that are now the shining examples and envy of our industry.
We have seen this very same dedication, hard work and cooperative spirit on the part of the unions and their members. They have understood the issues at hand and the stakes at play. Their response and reaction have been commendable.
Nevertheless, in these next couple of weeks, the stakes are higher than ever before.
The votes of our unionized colleagues for or against the required amendments to their collective bargaining agreements in the next days and months will decide the fate of our newspapers, Web sites and other businesses. I cannot state this more plainly.
If you have specific questions or comments you wish to share with me, please call my office at 312-321-3090 or email me at
Thank you and best regards.
Jeremy L. Halbreich
Chairman of the Board and Interim CEO