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Gawker readies for auction with plans to keep founder around
[NEW YORK] Gawker Media, driven into bankruptcy last week after losing an invasion-of-privacy lawsuit to Hulk Hogan, is seeking to wrap up an asset sale by early August.
The digital media company filed court papers Monday proposing a July 29 auction with an opening bid of US$90 million from Ziff Davis - which agreed to assume some liabilities, but not the US$130 million damages awarded in the lawsuit brought by former pro wrestler Hogan and bankrolled by tech billionaire Peter Thiel.
Ziff Davis also agreed to keep Gawker founder Nick Denton on as a consultant if it wins the auction.
New York-based Gawker said it picked the Ziff Davis "stalking horse" offer from two proposals submitted in May. Before that, adviser Houlihan Lokey had contacted six potential bidders who had been "in prior dialogue" with Gawker about transactions similar to that proposed by Ziff Davis, according to court papers. Since May 25, additional interest in the sale has been generated, the company said.
The Ziff Davis bid includes what Gawker called an "extraordinary provision": an agreement to retain Mr Denton under a two-year consulting contract that pays about US$200,000 annually. The contract would also prohibit him from competing during that period.
Competing bids will be evaluated without regard for whether they include an agreement with Mr Denton, Gawker said.
Under the auction proposal, interested parties must submit documents by July 25 and bids by July 27. The auction would be held July 29 and a sale approval hearing Aug 3.
If outbid, Ziff Davis is entitled to a US$2.47 million breakup fee, with expense reimbursement of as much as US$1.25 million. A hearing to seek court approval of the sale procedures is slated for July 5 in Manhattan bankruptcy court.
Gawker is also seeking court permission to take out US$22 million operating loan, with Cerberus Business Finance as an agent, according to court papers.
Lenders include other affiliates of Cerberus Capital Management LP, according to the filings. The loan is to fund the sale and pay lender Silicon Valley Bank, Gawker said.
The case is In re Gawker Media LLC, 16-11700, US Bankruptcy Court, Southern District of New York (Manhattan).