Philadelphia's two main daily newspapers are looking for a new owner as part of a plan to settle US$318 million in debt.

The Philadelphia Inquirer reported Wednesday that an auction is set for next week for Philadelphia Newspapers LLC, the parent company of the Inquirer, which also owns the Philadelphia Daily News and Philly.comA bankruptcy judge on Tuesday extended the period during which the company can offer a plan to reorganise to April 30. The extension will give the company time to complete the auction scheduled for next Tuesday and potentially declare a new owner, according to the Inquirer.

"The auction is central to the company's plan to settle $318 million in debt to its senior lenders, who include Angelo, Gordon & Co., the CIT Syndicated Loan Group, Credit Suisse, and Eaton Vance Management," the paper states in the article. "The company will be sold at the auction, with the proceeds ultimately going toward the debt."

The Associated Press on Wednesday reported housing executive Bruce Toll, a previous investor in Philadelphia Newspapers LLC, and other local investors have made the only bid for the company, according to ABC News.

The bid came from a new entity Toll and others created, Philly Papers LLC. Philly Papers offered $35 million in cash and a $17 million letter of credit to buy everything but the North Broad Street headquarters, which would go to the lenders, according to the Inquirer.