WILMINGTON, Delaware (Reuters) - Newspaper publisher Tribune Co received approval for interim bankruptcy financing and can pay pre-bankruptcy filing employee wages, taxes and insurance premiums, a U.S. bankruptcy court said on Wednesday.
Tribune, the publisher of the Chicago Tribune and the Los Angeles Times, filed for Chapter 11 bankruptcy protection on Monday, just a year after real estate mogul Sam Zell took the company private and increased its debt load by about $8 billion.
The court approved the financing and all other motions made during a hearing on Wednesday, enabling the company to continue operating.
The financing deal with Barclays Plc's BARC.L Barclays Capital includes a $50 million letter of credit and continued use of a $300 million trade receivables facility it had made with Barclays in July. It has a $225 million balance on the facility.
Other motions included authorization for payments of pre-bankruptcy claims for shippers and some vendors.
The company’s lawyer said during the hearing that he believes the company will be able to reorganize because of a favorable debt structure.
Tribune’s debt at its operating companies is all unsecured, he said, which means the debt is all equal in terms of which will be repaid first. That eliminates one of the difficulties of restructuring negotiations, when committees representing different tiers of creditors fight each other to be repaid first.
“That is what makes this group of companies so remarkable and gives us the benefit of restructuring these companies in the most intelligent way possible,” James Conlan, a Tribune attorney with the law firm of Sidley Austin LLP, told Judge Kevin Carey in Delaware bankruptcy court.
Conlan said the company’s filing was largely based on a decline in the newspaper industry, which continues to lose readers and advertisers.
“We are here because our business depends mostly on advertising. There has been a precipitous decline in advertising due to the economy and changes in advertising and how it works,” Conlan said.
The judge also approved the company’s cash management system.
Reporting by Jessica Hall; Writing by Caroline Humer; Editing by Gerald E. McCormick and Brian Moss
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