Lenders Win Phila. Newspaper Auction

A group of creditors outbid Perelman at the Philadelphia Inquirer and Philadelphia Daily News auction.
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(Article updated with information on the winners of the Philadelphia newspaper auction.)

NEW YORK (

TheStreet

) -- A group of hedge funds, including

Angelo Gordon

and

Alden Global Capital

, outbid Raymond Perelman at the auction for

The Philadelphia Inquirer

and

Philadelphia Daily News

. The winning bid totaled $105 million, well ahead of Perelman's offer of $85 million.

The group of creditors had agreed weeks ago to purchase the newspapers out of bankruptcy protection. However they missed the deadline to complete their planned $139 million buyout due to unresolved labor contracts with the papers' truck drivers, also known as Teamsters.

The two newspapers, run by private company

Philadelphia Media

, have been operating under Chapter 11 bankruptcy protection since February 2009.

Philanthropist Perelman and his son,

Revlon

(REV) - Get Report

Chairman Ronald Perelman, bid against the creditors. Perelman has been known to express his passion for the Philadelphia papers.

"I have a strong interest in protecting the integrity of the newspaper and in the continued employment of as many employees (as possible)," 93-year-old Perelman told

The Associated Press

. "How can you have a city without a newspaper?"

In 2006, a group of investors led by former advertising executive Brian Tierney bought the newspapers for $515 million, but then filed for bankruptcy in February 2009. This time around Tierney was not a bidder.

-- Written by Theresa McCabe in Boston.

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