UPDATE | 11:02am — It’s happened. The Tribune Company, facing pressure on its mounting debts, has filed for bankruptcy protection.
Media conglomerate Tribune Co. has filed for bankruptcy protection, pressured by high debts.
The Chicago Tribune’s parent company was working with bankruptcy advisers at investment bank Lazard and law firm Sidley Austin to weigh financial options, sources told the Chicago Tribune for this morning’s paper.
Tribune Co. has been struggling under a $13 billion debt load since real estate magnate Sam Zell took the company private last December in an $8.2 billion leveraged buyout. The company faces a deadline today on $70 million of unsecured debt it took on before Zell’s deal.
In the wake of widespread layoffs and declining ad sales, the American newspaper business has had a trying time in 2008.
Now The Tribune Company, which owns eight major daily U.S. newspapers along with other media holdings, is rumoured to be on the verge of bankruptcy — and the company could file for “bankruptcy-court protection as soon as this week”.
Tribune Co. is preparing for a possible filing for bankruptcy-court protection as soon as this week, according to people familiar with the matter, in a sign of worsening trouble for the newspaper industry.In recent days, as Chicago-based Tribune continued talks with lenders to restructure its debt, the newspaper-and-television concern hired investment bank Lazard Ltd. as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, people familiar with the matter say.
A Tribune spokesman said the company doesn’t comment on rumors or speculation. Tribune owns eight major daily newspapers, including the Los Angeles Times, Chicago Tribune and Baltimore Sun, plus a string of local TV stations.
A spokeswoman for Lazard didn’t respond to requests for comment. Representatives of Sidley Austin couldn’t be reached for comment.
Although the company isn’t commenting on the rumours, the reality of the Tribune’s financial affairs is irrefutable — $70 million owed today and an additional $512 million owed within six months.
Tribune faces a deadline today on $70 million of unsecured debt from before real estate magnate Sam Zell took control last December in conjunction with an employee stock-ownership plan. A spokesman told the Chicago Tribune, however, that the company could use an existing line of credit to pay the bill.
A much bigger debt payment — $512 million — is due in June, and was to come from asset sales that now are hamstrung by the credit crunch. The company’s general interest payments amount to about $1 billion a year, and it already has paid down its debt by that amount this year.
“Getting a deal done on the Cubs or on a number of other properties is extremely difficult. Other sources of capital and debt have been significantly hampered,” the executive said. “Layer on that a business that has been in decline for years and a failing economy, and it’s a perfect storm.”