New York equity firm snaps up Tampa's Creative Loafing

Creative Loafing, the snarky alternative newspaper chain, will soon be in the hands of a New York-based private equity firm.

Atalaya Capital Management, the New York investment firm, blew away the only other bidder for Creative Loafing in a Tuesday morning auction in U.S. Bankruptcy Court in Tampa. Atalaya bid $5 million for Creative Loafing, its six weekly newspapers and several Web sites.

Ben Eason, the newspaper's publisher, failed with his bid of about $2.3 million.

The auction's results mean that a Bay area weekly newspaper known for critical reporting of local power players and racy articles and ads, will be owned by an established corporation. Atalaya says it will continue operating the chain.

Not to be left out, Eason said he's ready to launch a new Web-only community newspaper.

Creative Loafing got into trouble when it took on roughly $40 million in debt in 2007 to purchase two newspapers, the Washington City Paper and the Chicago Reader.

The purchase brought to six the number of its alternative newspapers. Aside from Tampa, Washington and Chicago, it also has newspapers in Sarasota, Atlanta and Charlotte. It also operates several Web sites around the country.

The economy soon plummeted, which cut into Creative Loafing's advertising and other revenues even as it was saddled with debt. It filed for Chapter 11 bankruptcy protection in Tampa in September.

Atalaya Capital loaned the company $30 million for its purchases. It has a secured claim of $12 million against Creative Loafing in bankruptcy court, as well as additional unsecured claims, Bowen said.

Even before this morning's auction, Atalaya Capital already had submitted a bid of $2 million for Creative Loafing's new stock.

Also today, Creative Loafing mainstay Wayne Garcia announced on his blog that he will be leaving.

Garcia, whose main beats were politics and media, makes no reference on the blog item as to whether the decision, or at least its timing, was related to today's sale.

Here's an expect from Garcia on his Creative Loafing blog:

"I have accepted a yearlong appointment as the Freedom Forum Visiting Professional at the University of Florida's College of Journalism and Communications, where I am teaching four sections of investigative journalism and editing this fall. For the past four years, I have worked to complete a Master of Arts degree in Mass Communications from the University of South Florida-St. Petersburg, and teaching was a goal of mine that the editors at CL have always supported. I have already started working on campus this week, while finishing up some projects for CL and editing the blog through the end of this week.''

"CL has left the door open for my journalism, and I hope to be able to contribute stories about Florida politics occasionally. So I won't say goodbye, just see you later.''