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Tribune widens deal to help it exit bankruptcy
WILMINGTON, Delaware |
WILMINGTON, Delaware (Reuters) - Tribune Co said on Tuesday it reached agreement with more parties to its bankruptcy as it tries to bring its publishing and broadcasting business out of Chapter 11.
JPMorgan Chase & Co (JPM.N) and unsecured creditors joined a settlement the company previously reached with two hedge funds that hold a large part of it senior loans.
The publisher of the Chicago Tribune and Los Angeles Times filed for bankruptcy in 2008, a year after real estate developer Sam Zell acquired the company in a leveraged buyout that was funded through piles of debt.
Tribune has spent its nearly two years in Chapter 11 fighting with creditors over who is to blame for the bankruptcy, and whether creditors found to be at fault should be paid what the company owes them.
The settlement does not change plans to turn the company's ownership over to holders of senior loan claims, which includes JPMorgan as well as numerous hedge funds.
The value of Tribune's loans rose following the announcement as the expanded settlement brings it closer to exiting bankruptcy.
As part of the new settlement, senior bondholders will receive a total of $420 million, or 32.73 cents on the dollar, plus their share of a litigation trust.
The trust will pursue legal claims, including those against advisers, directors and officers, stemming from the 2007 leveraged buyout.
To get the unsecured creditors on board, the company increased the amount it proposes to give to bondholders by $120 million from its previous offer. The additional money will be contributed by recipients of pre-bankruptcy payments on the loans that supported the leveraged buyout.
The company's statement did not identify the recipients of the pre-bankruptcy payments, but the Robert R. McCormick Tribune Foundation and the Cantigny Foundation were major shareholders prior to the buyout, according to court documents.
Unsecured creditors had taken aim at these foundations, arguing that they may have benefited from a transaction that they argued was a "fraudulent conveyance."
The lenders will backstop the agreement to ensure Tribune's estate has the money when it emerges from bankruptcy, the company said.
The expanded settlement has been endorsed by a court-appointed mediator, Tribune said.
The settlement looks very similar to a deal reached earlier this year, although that agreement collapsed after an examiner identified possible legal claims stemming from the leveraged buyout.
Even loan prices, which fell following the examiner's report in July, have risen back to where they traded prior to the appointment of an examiner.
Holders of the company's junior bonds, who are owed around $1 billion, do not support Tuesday's settlement, according to their attorney Robert Stark, of law firm Brown Rudnick.
Tribune did not mention junior bondholders, but previous proposals did not provide a recovery for them.
The deal still needs court approval and the company said it would file a detailed plan and supporting court documents by Friday.
The case is In Re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.
(Reporting by Tom Hals, editing by Dave Zimmerman)
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