A Worcester Superior Court Judge has put a temporary freeze on John Henry's pending acquisition of the Boston Globe and its affiliated properties in light of an ongoing class-action law suit.
The court order, first reported today by the Worcester Telegram & Gazette, was handed down Friday by Judge Shannon Frison. The move came a day before the Globe's parent, the New England Media Group, was to be sold to Henry by The New York Times Co., according to sources familiar with the deal.
The T&G, which also is a New England Media Group property, said the freeze stems from a 2009 class-action suit filed by independent newspaper carriers who sued the T&G for not treating them as employees, rather than independent contractors. Judge Frison said Friday's ruling was prompted by last weekend's planned closing date and concern that a sale to Henry could prevent the newspaper carriers from collecting a settlement, should they ultimately prevail in court.
The BBJ first reported last week that Henry's deal for New England Media Group was set to close Saturday, Oct. 19.
According to today's T&G story, the Times on Monday petitioned Frison to lift the embargo and allow for the sale to close. To allay the court's concern over sufficient settlement funds, the Times offered to set aside a sum, to be determined by Frison, that could be designated to pay the newspaper carriers should they win in court.
The T&G said Frison has capped the potential payout to the carriers at $60 million. The newspaper said the carriers have already won two favorable rulings in Massachsuetts courts, including Gardner District Court and state Appeals Court.
Henry's $70 million bid to acquire the NEMG was formally accepted by the Times in August. On Tuesday, the BBJ reported that contamination issues at the Globe's headquarters are likely to complicate any plans by Henry to sell or redevelop the property. Plans to redevelop the 16-acre property and move the Globe to a smaller location have been a key component among all of the offers fielded by the Times, according to local sources familiar with the process.
After reviewing confidential deal documents prepared for the Times, the BBJ reported in August that the New England Media Group’s total revenue is expected to fall to $363.8 million next year, off 18 percent from the $440.6 million booked in 2009. Despite around $35 million in cost cuts teed up through 2014, the company has forecasted nearly $20 million in net operating losses over the next two fiscal years.