The purchase of the Blethen Maine Newspapers, part of the Seattle Newspaper group, by an investment group, has been negotiated at a minimal price based mostly on the value of the real estate being transferred as part of the deal, reports the Morning Sentinel.

Investors would have the potential to pay off debt within three years through the sale of real estate and through cash flow generated by the newspapers. It's possible they could make a profit estimated to be five times net earnings should the business be sold in the future, the documents suggest.

This price base, as well projections on the potential to remove the newspapers debt within three years through the sale of real estate were presented to the Maine Public Employees Retirement System board of trustees. This was made by Richard Connor, publisher of the Wilkes-Barre Publishing Co., and Peter Brodsky, a partner at the HM Capital Partners private equity firm in Dallas, the Morning Sentinel reported.

Blethen Maine Newspapers was put up for sale by The Seattle Times Co., in March 2008.

On Tuesday, Peter Leslie, the chairman of the retirement system board of trustees, said investment advisers and an ad hoc committee recommended against investing in the deal. Leslie stated that the proposal was not the kind investment the board wanted to make.

However, Connor said too much emphasis was being put on the price of the sale, stating that the presentation formed the starting point of negotiations. He said he expects to close the deal within 30 days. Although he has made similar projections since he began his attempt to acquire the newspaper last July.

Robert Broadwater, managing director of Broadwater & Associates in New York, said the deal was angled to assure investors that the debt could be offset by the real estate value, calling it a "classic private equity deal." The overall goal is a low purchase price during difficult economic times and the growth of profitability.

Between two-thirds and 100 percent of the purchase price reflects the value of real estate.