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Did Platinum Pay $30 Million for U-T, or $52 Million?

Tom Gores, head of Beverly Hills-based Platinum Equity, owner of the Union-Tribune since 2009, is getting plenty of press attention now that he appears to be in the running -- maybe at the front of the line -- to buy the Detroit Pistons of the National Basketball Association. Crain's Detroit Business quotes Gores saying that the U-T purchase has "been better than expected, maybe much better." Crain's reports that Platinum paid "a reported $30 million" for the U-T. That's interesting, because it has always been assumed that Platinum paid $52 million, which was half the value of the real estate. I assume the $52 million is correct, because Matt Potter at the time added up the value of real estate transactions to get that figure. Crain's also refers to private equity group's "buy-fix-operate-sell" strategy. It has always been assumed that Platinum intended to dump the U-T at some point. In the interview, Gores refers to "the relatively short horizon of a private equity owner, typically five years." That, roughly, is Platinum's normal holding period. Thanks to Matt Potter for sending along the Crain's interview.

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Tom Gores, head of Beverly Hills-based Platinum Equity, owner of the Union-Tribune since 2009, is getting plenty of press attention now that he appears to be in the running -- maybe at the front of the line -- to buy the Detroit Pistons of the National Basketball Association. Crain's Detroit Business quotes Gores saying that the U-T purchase has "been better than expected, maybe much better." Crain's reports that Platinum paid "a reported $30 million" for the U-T. That's interesting, because it has always been assumed that Platinum paid $52 million, which was half the value of the real estate. I assume the $52 million is correct, because Matt Potter at the time added up the value of real estate transactions to get that figure. Crain's also refers to private equity group's "buy-fix-operate-sell" strategy. It has always been assumed that Platinum intended to dump the U-T at some point. In the interview, Gores refers to "the relatively short horizon of a private equity owner, typically five years." That, roughly, is Platinum's normal holding period. Thanks to Matt Potter for sending along the Crain's interview.

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Comments
15

In the interview, Gores refers to "the relatively short horizon of a private equity owner, typically five years." That, roughly, is Platinum's normal holding period.

In a normal market maybe 5 years is typically the hold, but not this one, in fact it may be 10 years before they can dump the UT for ANY $$$$$$, and during that time they face all kinds of potential employer liability.

Sept. 22, 2010

Response to post #1: I have always thought Platinum would hold on to the U-T much longer than normal -- say, at least seven years. The depressed commercial real estate market inhibits any wholesale jettisoning for now. Best, Don Bauder

Sept. 22, 2010

It is impossible to tell what Platinum paid for the U-T without access to the purchase agreement. The purchase price of a business includes: (1) the amount of cash paid to the seller, and (2) the amount of business debt and liabilities assumed by the buyer. If Gores paid $30 million in cash for the U-T, and the U-T was loaded with $100 million in debt when he purchased it, he would have paid a total of $130 million for the U-T. Also, the $30 million figure may represent the cash Gores put into the deal. In an LBO, which is what this deal appears to be, the U-T would have borrowed most of the money used to buy Copley out and would repay the loan from profits. Gores could have put $30 million into the deal and the U-T could have borrowed another $100 million to buy Copley out.

Sept. 22, 2010

Response to post #3: At the time of the purchase, spring of last year, one who was involved in the deal on Platinum's behalf said the price was below $50 million. That was stated to the Wall Street Journal. Real estate values at transfer were $52 million. Copley had shed most if not substantially all of its debt before the transaction. Platinum has stated that. Gores has stated several times that the price was low. I am comfortable with $52 million or thereabouts. Best, Don Bauder

Sept. 22, 2010

Copley couldn't be too bad off financially. The link below shows that he flew his private jet to the Netherland Antilles on 1/2/2010. The trip probably cost $20,000, when you figure the cost of the pilot, fuel, depreciation, maintenance, and insurance overhead. It probably costs at least $500,000 a year to operate the jet. Copley's living expenses probably total at least $2 million a year.

Sept. 23, 2010

Response to post #5: Oh yes, David Copley is still going all over the world on his $33 million yacht. It requires a crew of something like 12. His expenses are enormous. No one said he is having trouble paying the light bill. He just doesn't have the resources he once had, having sold his main asset, the U-T, for roughly 5% of what it was worth 5 years ago. But I don't think you will see as much eleemosynary activity by David. Best, Don Bauder

Sept. 23, 2010

He just doesn't have the resources he once had, having sold his main asset, the U-T, for roughly 5% of what it was worth 5 years ago.

He reminds me of Michael Jackson, tons of money, but still not enough to fund his hi flying lifestyle.

MJ was a millionaire-living a billionaire lifestyle.

Copley is the same, and Copley was NEVER a billionaire.

Sept. 23, 2010

Is Copley http://www.flickr.com/photos/jordi757... leasing the jet or does he own it outright???

That is a BIG private jet, I would estimate the cost @ $3K per hour of use.

Sept. 23, 2010

The FAA website indicates that Copley Press owns the jet. At one time the jet was listed for sale on several websites, but Copley apparently never found a buyer. Google the jet's tail number and you'll find the jet flys all over the world

http://registry.faa.gov/aircraftinquiry/NNum_Results.aspx?NNumbertxt=700CN

Sept. 23, 2010

Response to post #7: David Copley made the Forbes 400 as a billionaire in, I believe, 2006. I did a column saying that he would drop off the next year. It was titled "David Copley's Wallet Losing Heft." You can find it easily on our website. I called Forbes at the time. The guy who puts together the Forbes 400 said the rating was mainly based on the value of the newspapers, not his other assets. The U-T alone was said to be worth $1 billion around that time. Copley later got almost $390 million for the money-losing Illinois and Ohio papers -- a great price (for Copley, not for the buyer). Yes, David did drop off the Forbes 400 the next year because of the broad decline of newspaper values. Best, Don Bauder

Sept. 24, 2010

Response to post #8: I am pretty sure he owns it and believe it is for sale, but I am open to anyone saying I am wrong. Best, Don Bauder

Sept. 24, 2010

Response to post #9: Yes, Matt Potter tracks the trail of that jet. It is still flying around the world. He may have taken it off the market. Best, Don Bauder

Sept. 24, 2010

check these 2 links out surfpuppy.

Good link, does not look like htey included the costs of the fluigth crew in the hourly operating expenses though....

Sept. 24, 2010

Response to post #13: Ah, the life of leisure -- and so well deserved after a lifetime of hard work. Best, Don Bauder

Sept. 24, 2010

Response to post #14: There are so many more important blanks that could be filled in in the history of the Copley family and company. Best, Don Bauder

Sept. 24, 2010

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