Tribune files for bankruptcy protection
Written on December 9, 2008
Tribune Co has filed for Chapter 11 bankruptcy protection after struggling under a heavy debt load, according to a court document filed with the U.S. bankruptcy court in Delaware on Monday.
The privately held publisher of the Chicago Tribune and Los Angeles Times, which took on about $13 billion of debt when it went private last year under a deal led by real estate mogul Sam Zell, said in the filing that it had $7.6 billion in assets and $12.97 billion in debt as of December 8.
Tribune said its unsecured creditors include J.P. Morgan Chase & Co’s JPMorgan Chase Bank with an $8.57 billion claim under a senior facility and Merrill Lynch & Co Inc’s Merrill Lynch Capital Corp with a $1.6 billion claim under a bridge loan facility.
Its equity holders include a Tribune employee stock ownership plan with 56.52 million shares.
The filing does not include Tribune’s Chicago Cubs Major League Baseball team, or their storied ballpark, Wrigley Field. Tribune has been trying to sell both.
Earlier in the day, a source briefed on the matter had told Reuters that Tribune had hired investment bank Lazard Ltd to look at a possible bankruptcy filing even as the publisher and broadcaster talked with lenders to renegotiate its debt.
The filing said Tribune had retained Lazard and Alvarez & Marsal as financial advisers, and Sidley Austin and Cole Schotz Meisel, Forman & Leonard as legal counsel.
Tribune has been trying to sell off properties such as the Cubs to pay off debt fast pay day loan. It had already sold the Newsday newspaper on New York’s Long Island to Cablevision Systems Corp.
During the third quarter, Tribune also sold a 10 percent interest in online job site CareerBuilder to Gannett Co Inc for $135 million.
Analysts had said Tribune’s biggest challenge was to avoid violating the lending terms, or “covenants,” on what they estimated to be about $10 billion of guaranteed debt.
UNDER PRESSURE
The Tribune, which owns many newspapers including the Baltimore Sun and the Orlando Sentinel, is under pressure from declining advertising revenue and circulation as more people get news online and as companies cut their marketing budgets because of the limping economy.
“The Tribune Co’s financial condition is symptomatic of the ills that plague the newspaper industry,” said Jerome Reisman, a bankruptcy attorney with Reisman, Pierez & Reisman.
“Chapter 11 will allow the Tribune Co. to negotiate with its creditors including bond holders with leverage and hopefully result in survival of its business,” Reisman said.
Besides newspapers, Tribune also owns 23 television stations, which are expected to be hit by the typical advertising declines that follow major elections — such as the 2008 presidential contest — when political spending virtually disappears.
Filed in: technology.