Tribune Co, owner of the Chicago Tribune, Los Angeles Times and six other daily papers, is exiting bankruptcy, four years after a doomed leveraged buyout by billionaire Sam Zell led to Chapter 11 proceedings.
Distributions to creditors were to begin yesterday, the Chicago-based company said in a statement.
As part of its emergence from bankruptcy, Tribune Co also will close on a new US$1.1 billion term loan and a US$300 million revolving credit line.
“Tribune will emerge from the bankruptcy process as a multimedia company with a great mix of profitable assets, strong brands in major markets and a much-improved capital structure,” chief executive officer Eddy Hartenstein said in the statement.
Tribune Co filed for bankruptcy after Zell, a real-estate developer, orchestrated an US$8.3 billion leveraged buyout of the company in 2007, just before a global recession and a slump in print advertising devastated the newspaper industry.
The buyout loaded Tribune with debt, and Zell failed to pull off a turnaround of the newspapers. He put the company into bankruptcy in December 2008, triggering a court fight between bondholders who held Tribune’s pre-buyout debt and the lenders who funded the takeover. A settlement approved by the bankruptcy court allowed the older creditors to try to recover some of their losses by pursuing lawsuits against shareholders and managers, including Zell.
In November, Tribune Co won approval from the US Federal Communications Commission to transfer its television and radio licenses to new owners — including JPMorgan Chase & Co and hedge funds Oaktree Capital Management LP and Angelo, Gordon & Co — the last hurdle to emerging from bankruptcy. US Bankruptcy Judge Kevin Carey accepted Tribune’s proposal to divide ownership of the newspaper and television company among its lenders in July.
Tribune Co owns eight daily newspapers, 23 television stations and stakes in more than 50 Web sites, including CareerBuilder.com.
The company’s owners have been seeking an adviser for a possible sale of at least some of its newspapers, people familiar with the situation said last month.
Rupert Murdoch, chairman and CEO of News Corp, plans to take a close look at Tribune Co’s newspaper assets once they are available, according to a person with knowledge of his thinking.
Tribune Co’s board — Bruce Karsh, Ken Liang, Peter Murphy, Ross Levinsohn, Craig Jacobson, Peter Liguori and Hartenstein — will meet in the next several weeks, the company said.
The directors will ratify the company’s executive officers at that time. Until then, Hartenstein will remain in the CEO job, Tribune Co said.