In an interview with the Orange County Register published earlier this week, Burl Osborne, the interim CEO of Freedom Communications, said that the company is in discussions with its bankers about “restructuring.”

Freedom, which owns dozens of media properties, including the Register and the Colorado Springs Gazette, is more than $700 million in debt.

Asked what such “restructuring” might entail, Osborne was blunt.

 “What happens,” he told the Register “is a certain amount of the debt – a large measure of debt – is exchanged for equity held by existing shareholders … The bank groups then take control of the company. They assign a new board of directors and hire their own CEO.”

Freedom has been controlled by the Hoiles family since 1935. However, Osborne told the Register that it is uncertain whether the family will retain any equity after restructuring.

Negotiations over an agreement are under way,” he told the paper. “We are hopeful – though one can’t be certain of anything – that the family will retain some minority ownership of the company.”

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During 2002, Blackstone Group and Providence Equity Partners purchased minority stakes in Freedom. It also is uncertain whether either group will retain a minority interest after the restructuring.

And, Osborne told the Register, the process might involve bankruptcy.

“It is possible to have a consensual agreement that is executed out of court, and it’s possible to have it done under court supervision,” he said. “If the bank group did not all agree, then it could go into Chapter 11 bankruptcy reorganization in a consensual filing, but it does not mean the company is bankrupt.”

Osborne told the Register that a restructuring plan might be in place within “next several weeks” and the transfer of control to a new CEO and a new board to take place a few months later.

Osborne was not asked whether he anticipated that a restructured Freedom might liquidate some or all of its holdings in order to satisfy its creditors. 

But in a blog posting Tuesday, Gazette Editor Jeff Thomas noted that big changes might be coming to Colorado Springs’ daily newspaper.

“The unanswered question is what it all will mean for The Gazette,” Thomas wrote. “In the short run, probably not much. But longer term, the assumption is that banks don’t want to be in the news business, and new ownership will be sought. Given all the forces buffeting this business these days, the future is exceedingly difficult to predict.”

The 2002 buyout was driven by Colorado Springs resident Tim Hoiles, who owned 9 percent of Freedom’s equity.  Reportedly dissatisfied with buyout offers from other family members, he hired attorneys and investment bankers to structure a better deal. 

Hoiles sold all his shares. Other family members also sold shares, although many chose to retain their positions.