Relief had set in among the employees of the Monterey County Herald. Four months of uncertainty had finally been alleviated with word that a well-respected newspaper company that many considered to be an ideal buyer had agreed to purchase the Herald’s parent company Knight Ridder.

But there was a catch: That company, McClatchy Co., planned to turn around and resell the Herald and 11 other newspapers, including the San Jose Mercury News.

According to Joe Livernois, longtime staff writer and the Newspaper Guild’s shop steward at the Herald, anxiety once again descended upon the paper’s staff. What’s more, it looks like it may be a few more months before there are any definitive answers about who will ultimately employ them.

“When we’d looked over the possible chains that might be buying us, McClatchy was the best alternative,” Livernois says. “We were pretty thrilled when we found out they were.”

Then the folks at the Herald read the fine print of the deal and discovered that McClatchy planned on selling the Herald.

“We’ve been sitting on pins and needles for three to four months,” Livernois says. “Now we have another three to four months to wait.”

Yet Livernois and other members of the Newspaper Guild believe the McClatchy sale may prove to be the best possible scenario. That’s because the Guild had originally hoped to buy eight of the 12 newspapers that McClatchy is selling. Their bid was rejected, however, because Knight Ridder had insisted on an all-or-nothing deal. But McClatchy’s move has made it possible for the Guild to purchase a chunk of the newspaper empire.

“It became strategically very promising for the Guild itself. We feel we have a much stronger potential bid than any other bidder might have because we are making a pitch for all 12 of the papers and we doubt that anybody will have the ability or wherewithal or legal right to bid on all 12,” Livernois says. “Now that the dust has settled we feel encouraged.”

Analysts and industry observers have speculated that other possible buyers might include big media chains such as Gannet or Hearst, as well as private equity funds or smaller media concerns.

Yet Gannett owns the Salinas Californian, and the Hearst-owned Chronicle shares a market with the San Jose Mercury News. As a result, a purchase of the 12 papers by either company would raise serious anti-trust issues.

In addition, the Mercury News also reported that deep-pocketed “buyout funds” such as Kohlberg Kravis Roberts and Thomas H. Lee Partners have an interest in owning some Knight Ridder properties and have been involved in the early bidding.

Yet the Newspaper Guild has suddenly emerged as a frontrunner. Early last week, the Guild announced plans to facilitate a bid led by buyout fund The Yucaipa Companies to purchase all 12 papers and make them employee-owned. According to Livernois, Friday is the deadline for Yucaipa to submit that bid to McClatchy.

Under this plan, Yucaipa would invite employees to invest with a portion of their 401(k) funds, creating an employee stock ownership plan (ESOP).

“It sounds on paper like it would be a cool deal,” Livernois says. “It would be employee-friendly and worker-owned. But the bottom line is that the Herald still needs to make money. I’ve heard that the experience of working for an ESOP paper was no better or no worse than any other paper.”

Yet Livernois admits that an employee-owned venture would be “a hell of a lot better” than being owned by a corporation like Gannett or Singleton, a company which, Livernois says, is renowned for cutting resources and employees.

To generate community support for the bid, the Guild is erecting a Web site, an idea inspired by a similar campaign at the San Jose Mercury News.

“The Merc has had a lot of success,” Livernois says. “Over 700 people, including former mayors of San Jose and former publishers, have used their Web site to send a message to McClatchy urging them to sell to the Guild instead of some slash-and-burn operation like Singleton.”

Of course, the Guild deal is complicated and employees are a little nervous.

“Their hackles go up when they hear that someone is asking them to donate their pension fund,” Livernois says.

He says there would be no hats passed in the newsroom to raise funds for the purchase. Initially Yucaipa would put up all the money. Herald workers would then invest a percentage of their retirement money.

Livernois says Ron Burkle, founder and managing partner of Yucaipa, would probably only keep the paper for seven to eight years.

“He’d grow its equity, make it better, then bail out and leave it to the established management company to own and operate,” Livernois says.

So although Herald employees must work under temporary ownership for a few months, there is guarded optimism for the future.

“Working for a lame duck is kind of odd, but the nice thing about this possible scenario is it would prevent us from being beholden to a corporate master for any longer,” Livernois says. “The Herald has been played and traded for so long by the investors that it’ll be a nice return to sanity. The Guild scenario would establish that.”

Livernois says the Herald Guild’s Web site is schedule to be live by Thursday or Friday at savetheherald.com