The End Of Employee Ownership At Tribune?
August 19, 2009 at 5:13 AM (PT)
TRIBUNE's short-lived experiment with employee ownership is coming to an end, reports THE NEW YORK POST. The company that's lone radio property is Talk WGN-A/CHICAGO is still in the middle of the bankruptcy process -- and creditors are "unlikely to keep the employee stock ownership plan, leaving workers with worthless shares," a source involved in the negotiations told THE POST.
Two years ago, ZELL used the stock plan, called an ESOP, to gain tax benefits on the $8.2 billion buyout of the TRIBUNE COMPANY. The plan made employees owners with 100% equity, but with no say over management or the board. In the bankruptcy, they are looked upon as common shareholders with less claim than other creditors.
"That's the typical scenario for bankruptcy," said NATIONAL CENTER FOR EMPLOYEE OWNERSHIP Exec. Dir. COREY ROSEN. "The creditors say, 'Forget about the ESOP. It's common stock and well down the list of creditor situations.'"
TRIBUNE's ESOP has caused somef confusion, with experts saying that workers didn't directly fund the plan. Instead, the company agreed to make contributions as it would to other benefit plans, such as a 401(k) or pension. Those contributions were supposed to be invested in TRIBUNE stock. However, TRIBUNE filed for bankruptcy before it made its first contribution.