Carlos Slim's $250 million investment in the New York Times Co. is a risky financial bet, but BloggingStocks pointed out an interesting upside: The deal will likely take the Mexican billionaire's business dealings, which have been criticized highly in Mexico as being monopolistic, off the Gray Lady's map of investigative reporting.
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That in itself might be well worth the price. After all, Slim's perception as a well-regarded businessman outside his native Mexico would only continue under the eyes of the Times. And with 20 million unique users for its Web site in the month of October alone, that's a big influence that Slim or any businessman wouldn't mind.
As for Slim's loan to the Times, two of his entities will each invest $125 million
in exchange for six-year notes with warrants that are convertible into
common shares, the Times said in a statement. The notes hold a 14%
interest rate, with 11% paid in cash and 3% in additional bonds. Meanwhile, the warrants can be converted
into 15.9 million common shares at a strike price of $6.36 a share, a slight
discount to where the shares closed on Friday. The Times is expected to use the money to refinance its existing debt.
But it's the company's total debt of more than $1 billion that scares many. While Slim will obviously be paid handsomely for his money (assuming the company doesn't fall into bankruptcy), is it enough to reinvigorate the Gray Lady in the long-term and make Slim's shares worth more than the initial strike price? With all the Times' recent restructurings, layoffs and divestitures, including the possible sale of a stake in the Boston Red Sox, Slim and the Times are hoping that an answer to that question will be yes. But at least for the time being, Slim may be guaranteed some good press. -
Gerald Magpily See BloggingStocks post
