The Chicago-based media company — whose properties include the Daily Press, the Virginia Gazette and the Chicago Cubs — wants to restructure payments on $12 billion in debt.
By James Rainey and Michael A. Hiltzik
December 8, 2008
The company that owns the Daily Press, the Virginia Gazette, the Chicago Tribune and the Los Angeles Times filed for bankruptcy protection today, seeking relief from $12 billion in debt that largely stems from last year’s leveraged buyout of the media firm.
Tribune Co. directors approved the action to seek Chapter 11 protection in a meeting today, saying they want to restructure payments to banks and other creditors, following real estate magnate Sam Zell‘s purchase of the company last year.
The Chicago-based company had roughly $300 million cash on hand, more than enough to make a $70-million payment due today. But executives reportedly were unable to persuade lenders to undertake a broader restructuring of the debt.
Among other obligations, a $512-million principal payment related to Zell’s leveraged buyout is due in June.
Money for that payment was to come from asset sales, particularly the sale of the Chicago Cubs baseball franchise. That sale, originally expected to take place earlier this year, has been delayed in part because of the credit crisis and is now expected to take place in 2009.
Some analysts had previously set the value of the Cubs at more than $1 billion.
Tribune’s debt has become more burdensome over the last six months as advertising revenue at its eight daily newspapers and 23 television stations has fallen sharply. Industry projections are for further declines over the next six months to a year.
The company said it plans to file in Delaware, where it is incorporated.