Atalaya Capital Management outbid the founding Eason family at a bankruptcy court auction of the alternative newspapers in the Creative Loafing chain. But while the $5 million bid was the winner, former CEO Ben Eason is already talking about starting a competitor.
The Atalaya hedge fund was Creative Loafing’s biggest creditor, having loaned it $31 million for expansion. BIA Digital Partners was also owed $10 million, according to the story about the bankruptcy auction posted on the Creative Loafing webside.
The Eason family and company management began the bidding with an offer of $2.32 and Atalaya immediately topped that with the $5 million bid. US Bankruptcy Judge Caryl Delano in Tampa, where the chain is based, turned aside claims from the Easons that she should consider what is best for the communities and employees, not just cash, and approved the Atalaya bid.
“I’ve started three newspapers in my time. I’ll start a fourth,” Ben Eason was quoted as saying by the St. Petersburg Times after losing the auction. He mentioned using the “Planet” name for a new online venture based in Tampa. The weekly paper in Tampa had been known as the “Weekly Planet” before adopting the “Creative Loafing” name from the company’s original publication in Atlanta. The Creative Loafing name is also used in Charlotte, NC and Sarasota, FL. The Washington City Paper in the nation’s capital and Chicago Reader have retained their names since being acquired by the chain two years ago.
In a story on the Chicago Reader website, Eason denied that the acquisition did in his company. “The Reader and City Paper deal was a fine deal. That was not the deal that did us in. The deal that did us in was having any degree of leverage, and then having Craigslist and this economy. I had a reasonable-to-high degree of leverage in the City Paper-Reader deal and any leverage at all would have killed us,” he said.
Meanwhile, Atalaya Managing Partner Michael Bogdan told his new employees, “We are here for the long haul and we want to make this work.”