Zell remains committed to Tribune buyout-source
(Adds details, background, byline)
By Robert MacMillan and Megan Davies
NEW YORK, Aug 14 (Reuters) - Chicago real estate tycoon Sam Zell remains committed to taking Tribune Co. TRB.N private, a source close to the transaction said on Tuesday, countering investor concerns over the deal that have weighed on the U.S. newspaper publisher's shares.
Zell's perspective on Tribune "as an investment and as a company has not changed," said the source, who requested anonymity because the source was not authorized to speak for Zell.
Tribune shares fell to $24.46, their lowest level in nearly nine years, on Tuesday before the remarks about Zell. That was well below the $34 a share that investors will receive when the company goes private in deal with a total value of $8.2 billion. The shares regained ground to trade 1 percent lower at $25.49 on the New York Stock Exchange.
Investors have pushed down the stock ahead of a shareholder vote on the deal scheduled for next Tuesday, fearing that the company's worsening performance and a crunch in the wider credit market could endanger the buyout.
Zell did not return telephone calls seeking comment. A Tribune spokeswoman said the deal remains on track.
"The financing for it is fully committed," said Ruthellyn Musil, senior vice president of the corporate relations for the company. "We anticipate closing the transaction in the fourth quarter following (Federal Communications Commission) approval, and expect to be in full compliance with our credit agreement."
A separate source familiar with the situation said there were no known talks between Zell and Tribune about renegotiating the $34-a-share deal price.
That source said Tribune's recent share price decline was not based on any news apart from a weak market environment for newspaper stocks.
TERMS OF THE DEAL
There is still the possibility that financing terms will be renegotiated nearer to the time the deal closes, a practice becoming common for several leveraged buyout deals amid the current credit squeeze, the source said.
But it is unclear what the state of the financing markets will be at the time the Tribune deal closes.
Financing deal terms have been renegotiated on a number of leveraged buyout deals such as Dollar General Corp. (DG.N), as lenders tighten access to cash.
The subprime mortgage meltdown and concern from debt investors over highly leveraged deals have effectively shut down the credit markets.
Buyout firms looking for cheap debt and loose lending terms are getting turned away by investment banks, fearful that they will be unable to offload leveraged buyout loans to investors.
Under the terms of its deal, Tribune will be restructured as an employee-owned company in a transaction fueled largely by debt. Tribune publishes the Los Angeles Times, The Sun in Baltimore and the Chicago Tribune, along with its broadcast assets.
The company in May said it repurchased 126 million shares, or about 52 percent of its outstanding stock at the time, at $34 a share as part of its cash tender offer. It plans to buy the remaining shares later this year.
The current Tribune share price gives a 33 percent arbitrage spread, which is the percentage difference between a bid for a company and its current share price.
A spread of 5 percent or less typically indicates that investors believe a deal is likely to close. Spreads on leveraged buyouts have widened to more than 10 percent as credit markets have tightened.
((Editing by Dave Zimmerman/Deborah Cohen; Reuters Messaging: robert.macmillan.reuters.com@reuters.net; 646-223-6012; e-mail: robert.macmillan@reuters.com.)) Keywords: TRIBUNE ZELL/
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