Wayzata Investment Partners, by far the Star Tribune's largest stockholder, has proposed buying a controlling stake in the media company.

If other owners approve Wayzata's proposal, the private equity outfit would acquire some of Credit Suisse's holdings of Star Tribune stock for $32 per share, increasing Wayzata's stake in the newspaper from 49.8 percent to 58.2 percent.

If enough shareholders object to the Credit Suisse deal -- and Wayzata still wants a bigger piece of the Star Tribune -- Wayzata would have to make a tender offer to all Star Tribune stock holders for at least $32 per share.

"You should not assume that this price represents anyone's view of the company's value in a sale of the entire company or otherwise," Star Tribune Chairman Michael Sweeney said in a letter to company shareholders.

The newspaper has been mostly owned by its former creditors since emerging from bankruptcy in September 2009, with no individual group holding more than 50 percent. Wayzata, a private equity group with interests in everything from casinos to restaurants, has been the dominant owner.

"Clearly, [Wayzata's decision to up its stake] is a sign that investors who have been with us for the last three years continue to see value investing in the Star Tribune," Sweeney said in an interview.

Mike Klingensmith, Star Tribune publisher, called Wayzata's stock purchase plan an "endorsement of our strategy," but that it wasn't a "huge development."

Under the Star Tribune's stockholders agreement, a supermajority of shareholders -- those who hold at least 66.66 percent of the remaining shares not involved in the proposed purchase by Wayzata -- could nix the deal by voting against the purchase of Credit Suisse's 128,951 shares.

If that occurs by the July 30 deadline for filing objections, Wayzata would have the option to put forward a tender offer of $32 per share to all Star Tribune shareholders. That price is based on a mechanism in the Star Tribune stockholders' agreement, one predicated on recent stock sales.

Any tender offer would then cause Wayzata Investment to divulge additional information, including its intentions for the Star Tribune company. The Star Tribune board is expressing no view on the $32 price of any tender offer, should it be made, the letter said.

Based on that $32 price and share information in the letter regarding the Wayzata purchase, the Star Tribune's equity would be worth about $49 million.

Klingensmith said, though, with the company's debt, its "enterprise value" would be around $120 million. And, it's "not appropriate to presume [$32 per share] would be the price of the company," he said.

In 2007, private equity firm Avista Capital Partners purchased the Star Tribune for $530 million from McClatchy Co., the last media company to own the paper. Wayzata Investment, which specializes in distressed securities, is also a financial owner with the eventual aim of selling its investment for a profit.

Wayzata executives didn't return calls for comment. The firm's move comes on the heels of a new $975 million Vikings stadium to be built near the Star Tribune, likely boosting the value of land owned by the newspaper.

One key block for the stadium, which includes a vacant building and parking lot, is owned by the Star Tribune. The paper owns four other blocks that, while not part of the stadium plan, could be ripe for development.

"Certainly, the Vikings situation is potentially beneficial to our balance sheet," Klingensmith said. The Star Tribune recently hired a broker to handle real estate dealings regarding its downtown land but has received no offers so far, Klingensmith said.

Over the past five years, the newspaper industry has struggled financially, as the erosion of its traditional business model was magnified by the effects of the Great Recession. The tailspin is perhaps best exemplified by the recent decision of the Times-Picayune in New Orleans to reduce its daily circulation to three days a week.

Still, some newspapers have seen their financial conditions stabilize and have boosted consumer revenue through electronic subscriptions. The Star Tribune, for example, launched a digital subscription package in October, while its print circulation has climbed over the past year.

Meanwhile, investors recently have been on a bit of a newspaper buying spree, albeit at bargain-basement prices compared with the industry's heyday.

In May, Warren Buffett's Berkshire Hathaway Co. announced it had bought 63 dailies from debt-ridden Media General. Freedom Communications completed the sale of its newspaper portfolio, including the Orange County Register, last month. And the Philadelphia Inquirer was sold in March for the fourth time in six years.

The Star Tribune has had at least one serious potential suitor in recent years.

The company has had ongoing contact with the Atticus Fund, which made an unsolicited tender offer Oct. 28, 2009, according to Sweeney's letter. The Atticus Fund is an investment vehicle that has included Minnesota Timberwolves owner Glen Taylor.

From time to time since, Atticus has requested more information from the Star Tribune for a possible deal, the letter noted. "Given its previous tender offer and ongoing interest, Atticus could be a potential purchaser of Wayzata's Common shares."

Wayzata Investment Partners was spun off Minnesota-based agribusiness giant Cargill in 2004.

If Wayzata succeeds in buying Credit Suisse's stake, the investment firm could then continue purchasing Star Tribune shares and end up owning at least 66.66 percent of the company. At that point, it could unilaterally dissolve the stockholders' agreement, eliminating protections for minority shareholders.

Mike Hughlett • 612-673-7003