Tribune bond prices rise after examiner's report released
The Tribune Co. examiner's report pushed up prices on some of the newspaper publisher's bonds sold before the 2007 leveraged buyout.
The Tribune Co. 4.875 percent senior secured bonds of August 2010 traded yesterday at 30.75 cents on the dollar, up 34 percent from the previous day. Times Mirror Co.'s 7.5 percent senior secured bonds due in 2023 traded at 30.45 cents, a gain of 19 percent from July 14.
The examiner's report said there is some likelihood that a court would rule that debt issued in the final step of the leveraged buyout in December 2007 could be attacked successfully as a constructively fraudulent transfer. Bonds issued earlier would benefit in bankruptcy, thus explaining the price spike.
Even before yesterday's improvement in price, those who bought the bonds last year already banked a substantial profit. The 4.875 percent bonds could have been purchased on Feb. 26, 2009, for less than 3 cents on the dollar. A day later, the 7.5 percent Times Mirror bonds traded at 0.7 cent.
The examiner issued a report on the evening of July 26 evaluating the strength of arguments for and against the fraudulent transfer claims. For a summary of some of his conclusions, click here for the July 27 Bloomberg bankruptcy report.
Tribune reached an agreement with the official creditors' committee and two unions by reducing the management bonus program for 2010. A hearing for approval of the revised bonus pool is set for Aug. 9. Tribune first sought approval of the bonuses by filing a motion in May.
Tribune currently has a confirmation hearing scheduled to begin on Aug. 30 for approval of a Chapter 11 plan that would settle claims that the $13.7 billion leveraged buyout led by Sam Zell contained fraudulent transfers. The plan is opposed by holders of $3.6 billion in pre-LBO debt who announced their opposition even before the settlement was formally disclosed. For details of the plan, the proposed settlement, and the parties' arguments, click here for the April 13 Bloomberg bankruptcy report.
Tribune is the second-largest newspaper publisher in the U.S. It listed $13 billion in debt for borrowed money and assets of $7.6 billion in the Chapter 11 reorganization begun in December 2008. It owns the Chicago Tribune, Los Angeles Times, six other newspapers and 23 television stations.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District Delaware (Wilmington).