ENQUIRERA few months ago, regular readers might recall, financial firm Chatham Asset Management threatened to sue Pando for $300m over our investigation into their dealings with the New Jersey State Investment Council.

There’s a whole lot of bizarreness around the threat, aside from the fact that it’s entirely without merit: A naked attempt to scare off any reporters who might decide to investigate Chatham’s relationship with the Chris Christie administration.

I’ve already written about the bizarre seven page letter sent to us Chatham’s lawyer — an entertainment specialist called Marty “Mad Dog” Singer — which attempted to portray our journalism as reckless and the reporter of our piece, David Sirota, as “unhinged”. (In case you were wondering, aside from Chatham Asset Management, Mr Singer’s other clients include Arnold Schwarzenegger and Jean Claude Van Damme.)

Perhaps the weirdest twist, though, was the appearance, just hours before Singer’s legal threat landed, of a bizarre article in the National Enquirer, entitled “EXCLUSIVE! CHRIS CHRISTIE’s WHITE HOUSE DREAM ALIVE!”

The article — apparently the first and only pro-Christie article in the Enquirer archives (following a string of hit pieces) — insisted that “Embattled Governor Chris Christie will recover from [Bridgegate] and play a major role in the 2016 race for the White House.”

The Enquirer then spent six whole paragraphs attacking Pando’s reporting, and David Sirota personally, including describing him as “a crazy person” and repeating many of the same baseless smears on his professionalism as Chatham’s attorney had included in his letter.  Finally, it attempted to dismiss our reporting, insisting that no violation of New Jersey investment rules had occurred:

The ENQUIRER has since learned that the contract was pending and that no funds had been transferred by the New Jersey State Investment Council and a spokesperson for New Jersey’s Treasury Department said that the do­nation from the hedge fund’s principal and his wife to the Republican National Committee was not in violation of Trea­sury rules.

Why on earth, we wondered, would the National Enquirer suddenly decide to pen an unbylined hit piece on Pando and Sirota, especially one that’s at odds with all their previous reporting on Christie. Also, how did the Enquirer’s piece happen to contain such similar language to Chatham’s legal letter which arrived right afterwards? Is the Enquirer somehow in Chatham’s debt?

As it turns out, they are. Quite a lot of debt.

According to media reports last week, the Enquirer’s owner, American Media Inc, is looking for a buyer to help settle its $513m in debts. Amongst the most likely buyers is one of the company’s major creditors.

Says The Deal:

Under the deal, the [buyers] would get 100% of American Media’s equity for $2 million in cash and the assumption of $513 million in debt, in addition to a pledge to make sure the company has at least $10 million in liquidity for the next 12 months.

So who, according to SEC documents, is one of the two major creditors to whom the National Enquirer’s owners owe so much?

Would you believe… Chatham Asset Management.

Says the New York Post

AMI had renegotiated its second lien notes in October, reducing them from 13.5 percent to 10 percent — but with interest payable only at the end of the note on Dec. 15, 2016 — or with the retirement of the company’s 11.5 percent first-tier lien notes.

The reason the second-tier bondholders are willing to help generate an extra $12 million in cash flow that can be channeled into retiring first-tier debt is because the principal bondholder of both classes of debt is Chatham.

The company said it already used savings to buy back $2.3 million of bonds in February and will make another first-tier loan retirement of $6 million at year end.

In other words, when the Enquirer launched its attack on Pando, and its defense of Chatham Asset Management, it was already millions of dollars in debt to Chatham. And very soon the magazine could actually be owned by Chatham.

And yet, despite this grotesque conflict of interest, the magazine made absolutely no reference to its relationship with Chatham in its report attacking Pando and protesting Chatham’s innocence.

I contacted the National Enquirer for comment yesterday but haven’t heard back. I’m hoping when they do reply they’ll reassure us, and any other reporters who might decide to cover Chatham Asset Management, that they are not, and will not be, involved in smear campaigns on behalf of their hedge fund creditors. A request for comment from Chatham this morning has also gone unanswered.

In the meantime, here’s a fun few paragraphs from American Media own Code of Ethics and Corporate Conduct:

While there are no universal rules about ethical conduct, when in doubt ask yourself:

  • Will my actions be ethical in every respect and fully comply with the law and with the Company’s policies?
  • Will my actions have the appearance of impropriety?
  • Will my actions be questioned by my supervisor (if applicable), fellow employees, clients, family and the general public?
  • Am I trying to fool anyone, including my self, as to the propriety of my actions?

If you are uncomfortable with your answer to any of the above, you should not take the contemplated actions without first discussing them with the Company’s General Counsel or Senior Vice President of Human Resources.