AUGUSTA — The managers of the pension fund for state employees on Tuesday rejected a request from investors for money to help buy the state's largest daily newspaper company.

The chairman of the Maine Public Employees Retirement System's board of trustees said that advisers and an ad hoc committee have recommended against investing in the purchase of the Blethen Maine Newspapers, which publishes the Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal in Augusta and the Morning Sentinel in Waterville.

Board members heard a pitch last Thursday from businessmen seeking to buy the properties. But Tuesday, board chairman Peter Leslie sent an e-mail to his fellow board members saying staff members and consultants have been instructed to "suspend consideration of the proposal."

Leslie and fellow board members Catherine R. Sullivan and Benedetto "Ben" Viola made up the ad hoc committee that discussed the proposal by Bangor native Richard Connor and investor Peter Brodsky of Dallas-based HM Capital Partners.

Among the factors Leslie cited was that Brodsky and Connor did not present much hard data because of confidentiality concerns. This did not give the board enough information to proceed on, Leslie said.

"We just want to be able to analyze the past history, cash projections, the business plan going forward," Leslie said. "If we can't do that, how do we do the deal?"

Leslie also noted that any information provided to the board would be open to the public under freedom of information laws.

Connor, editor and publisher of the Times Leader newspaper in Wilkes-Barre, Pa., said the decision was "not fatal to our deal (to buy the newspapers) in any way." He said the investment group was working with two banks with Portland offices to buy the newspapers.

"This is part of the deal-making business. You have people say yes and people say no," Connor said. "They were just one option. We were attracted to them because they were a Maine pension fund."

The presentation to the board by Connor and Brodsky was first reported in an article in the Ellsworth American, which noted that Connor had bank financing lined up to buy the newspapers, but was looking for $10 million in private equity investment. The paper reported that Brodsky said his investment firm has pledged about $1.1 million toward the purchase.

Connor said Tuesday the board's decision not to invest does "not cast any kind of aspersions on the quality of this investment and the deal. They chose a way to examine this that didn't allow us to give them all the details. They never saw a financial model, they just know we said we'd be more than happy to take up to $10 million from you to invest in this newspaper project."

He continued: "We would have been prepared to show them the attractive aspects of this investment if they had chosen to look at it a different way, that would allow us to maintain confidentiality."

Those confidentiality restrictions, however, were "incompatible with the public and transparent investment policy the retirement system employs," said State Treasurer David Lemoine, a member of the board.

The Maine Public Employees Retirement System manages an investment fund valued at $7.6 billion. The system supports retirement plans for roughly 75,000 current and past state employees and teachers. In February, the trustees agreed to use 5 percent of the fund for private equity investments.

Another factor in the decision not to invest was that Connor's timeframe didn't seem to mesh with the board of trustees' normal operating procedures. The deal to buy the Blethen Maine assets is now moving quickly, while the investment fund moves at a more deliberate pace.

"We're a public retirement system, we're not the trading floor of Goldman Sachs," Leslie said.

Leslie also noted that when news of the proposal before the board became public last week, reaction...