PORTLAND — Maine Values LLC, owned by financier and North Haven resident S. Donald Sussman, completed its purchase Tuesday of MaineToday Media, the state’s largest media company.
The deal, which gives Sussman a 75 percent equity stake, clears the way for the company to repay debt and move ahead with ambitious growth plans, including moving from a legacy newspaper print company to one that operates and derives revenue from multiple platforms, including online enterprises.
“Across the board, our people are ready to move into a new time of growth for MaineToday Media and provide our readers with exceptional news coverage,” Neil Heyside, the company’s interim CEO, said in a prepared statement.
MaineToday Media owns and operates The Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal in Augusta, the Morning Sentinel in Waterville and the Coastal Journal in Bath, along with digital properties that include mainetoday.com, Maine Jobs and Raising Maine.
Sussman is one of the state’s leading philanthropists and political donors. He is married to U.S. Rep. Chellie Pingree, D-1st District. In a written statement, Sussman reiterated his previous pledge not to interfere with newsroom or editorial operations.
“I’m a businessman, not a newspaper editor,” he said. “I have tremendous faith in the editors and newsroom staff who have been hired by previous owners. They are dedicated journalists who will continue to do their jobs professionally and independently. They report the news thoroughly and fairly, and I’m not going to interfere with that in any way.”
Cliff Schechtman, executive editor of the MaineToday Media newspapers and associated websites, said, “We should be judged on the quality of our journalism and how well we serve the community.”
Completion of the deal with Maine Values LLC makes the newspapers Maine-owned for the first time in 14 years.
The Seattle Times Co. bought the business from Guy Gannett Publishing Co. in 1998, taking on heavy debt to finance the acquisition. As the economy and ad revenue slowed, the company began rounds of spending cuts and layoffs. It announced plans to sell the Maine properties in March 2008.
The company was purchased in 2009 by an investment group led by Richard L. Connor, with Texas-based HM Capital Partners holding the largest share. Mounting financial problems last year left the company insolvent and negotiating with creditors, and prompted further cuts to the work force.
Connor left the enterprise late last year after undisclosed conflicts with the board, and HM Capital then put the business up for sale.
When a proposed purchase agreement with another potential investor fell apart, Sussman stepped forward following contact by members of The Portland Newspaper Guild.
Sussman is the founder and chief investment officer of Paloma Partners, a billion-dollar-plus investment fund based in Greenwich, Conn. He has worked in hedge fund and private equity investing for more than 30 years.
Sussman has given millions of dollars to charitable and civic institutions in Maine. He was named the Spurwink Humanitarian of the Year in 2011. He also received a Maine Philanthropy Award last year at Colby College in Waterville.
He was the top political donor in Maine in 2010, giving $1.3 million to Democratic and environmental causes. His largest donation that year was $390,000, to Equality Maine, which supports equal rights for gays and lesbians. Sussman has also been a major contributor to Pingree’s campaigns.
In the MaineToday Media deal, Sussman had planned to lend the company $3.3 million, acquire a 5 percent equity stake in the company and gain a seat on the board of directors. The financial structure changed, however, during final negotiations.
Institutional investors, including out-of-state pension funds, asked for important changes to the original package announced in February. Sussman’s financial contribution still adds up to the same amount of money, $3.3 million. But instead of a loan, the money is being used for a straight purchase of private stock. The result is that Maine Values will have a 75 percent ownership stake in the company, rather than 5 percent.
The change was requested by the institutional investors, according to Peter Brodsky, chairman of the MaineToday Media board of directors. They believed the additional debt could have hampered the company’s growth strategy, he said.
“It’s a good day for our company, our 412 employees and the 3,000 Maine vendors we work with in communities across the state,” Brodsky said in a prepared statement. “As with any deal, we had to listen to our institutional investors and be responsive to their feedback.”
Sussman’s limited role in the company’s operations remains unchanged with the straight stock purchase. He said that while he would have preferred the original arrangement of the loan and a smaller equity stake, he was not willing to abandon an important community resource and the hundreds of jobs that came with it.
“I’m just happy that the MTM newspaper business is secure and now has a chance to grow,” he said.
Staff Writer Tux Turkel can be contacted at 791-6462 or at: [email protected]