Sam Zell's Tribune Co., which publishes the Chicago Tribune and Los Angeles Times,
has filed for Chapter 11 bankruptcy protection only a day after the media reported that the company, which also owns TV stations and the Chicago Cubs,
hired investment bank Lazard as its financial adviser and law firm Sidley Austin LLP to advise it on a potential bankruptcy filing.
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The
Chicago Tribune reported that the company faced a Monday deadline on $70 million of unsecured
debt it took on before Zell's buyout. Plus, i
n June 2009, the company was expected to pay off $512 million still outstanding under the $1.4 billion tranche of
its term B loan, according to The Deal's Christine Idzelis. Total assets as stated in
the petition were $7.6 billion, and debts were $12.9 billion.
The company has been trying to keep its head above water on a $13 billion pile of debt since Zell
took the company private last December in an $8.2 billion leveraged
buyout. Tribune has been restructuring through layoffs and asset sales such as the auction of the
Chicago Cubs baseball team. The Cubs were supposed to be sold by the end of the year, but the credit crunch has stalled the sale, and there were reports that Tribune
might have to keep a 50% stake in the team. Reports were the stalled sale may not allow Tribune to meet existing debt covenants, which
prohibit borrowing more than nine times its earnings before interest,
depreciation and amortization, according to the Chicago Tribune.
Without filing Zell might have had to spin off more Tribune businesses.
The Tribune is one of several newspaper companies that has filed for bankruptcy or have put assets on the block. McClatchy Co. is selling the Miami Herald to make ends meet, but according to the Star Tribune it could still end up filing for bankruptcy. Newsday Inc. is selling the Rocky Mountain New, according to 24/7 Wall Street. Publicly held newspapers such as the Journal Register and Gatehouse are no longer trading on the NYSE, and rumors that the two
may sell or file for bankruptcy are circulating.
Creative Loafing, an owner of alternative weekly newspapers, filed for bankruptcy earlier this year. And the New York Times Co. is reportedly
considering a leaseback arrangement for its new Times Square heaquarters.
- Maria Woehr
See Tribune's bankruptcy petition filing (pdf)
