Tribune Files Reorganization Plan...
As Senior Creditors Blast Tribune Bankruptcy Settlement
April 12, 2010 at 1:44 PM (PT)
In the face of dissention from senior creditors, TRIBUNE COMPANY went ahead and filed with the UNITED STATES BANKRUPTCY COURT for the District of DELAWARE, a Plan of Reorganization to "keep the company intact, sharply reduce its debt, and provide it with sufficient liquidity to expand its business in the future."
In the face of dissension from senior creditors, TRIBUNE COMPANY went ahead and filed with the UNITED STATES BANKRUPTCY COURT for the District of DELAWARE, a Plan of Reorganization to "keep the company intact, sharply reduce its debt, and provide it with sufficient liquidity to expand its business in the future."
The Plan, which must still be approved by TRIBUNE creditors and the Court, was filed a day earlier than expected, soon after senior creditors, led by OAKTREE CAPITAL MANAGEMENT, publicly blasted the deal. Nevertheless, TRIBUNE executives expressed confidence of its eventual approval.
"TRIBUNE’s leadership team and employees have done an outstanding job of stabilizing and refocusing the company’s business,"Chairman SAM ZELL stated. "Today’s filing represents a significant and positive step forward for the business.”
"We continue to transform Tribune into an industry-leading media company, improving our competitive position," TRIBUNE CEO RANDY MICHAELS added. "This Plan better positions us to continue serving our users, readers, viewers, listeners and advertisers across our media platforms and gives us an opportunity to expand our business upon emergence from a solid financial base."
TRIBUNE expects to continue its recently implemented employee retirement plan, featuring a 401(k) with a company match and a discretionary profit-sharing allocation. The company’s employee stock ownership plan would terminate and the shares held by the ESOP and in employee accounts would be extinguished.
"We're looking forward to emerging from Chapter 11 and building on the momentum we've generated," MICHAELS said.
However, several senior creditors are objecting to a bankruptcy settlement proposed by the TRIBUNE CO. last week. The LA TIMES (owned by the TRIBUNE) reports that the creditors are demanding that TRIBUNE Chairman SAM ZELL and the company's board of directors share in the cost of the resolution and that the agreement to set aside as much as 7.5% of the company's equity for management compensation programs be shelved.
OAKTREE CAPITAL MANAGEMENT, which claims it holds $3.6 billion, or 42%, of the most senior level of TRIBUNE Co. debt, leads the dissenters, who are comprised largely of hedge funds. It filed court papers that termed the settlement proposal "internally inconsistent and unfair," asserting that it offered ZELL and others immunity from legal claims arising from the company's failed 2007 leveraged buyout without asking for anything in return.
The filing called any reorganization plan based on the settlement, which TRIBUNE plans on filing in advance of a hearing TUESDAY in front of the U.S. BANKRUPTCY COURT in DELAWARE. as being "dead on arrival."