Wednesday, November 19, 2008

Tribune Perilously Close To Loan Covenant Violations''

Tribune, the newspaper publisher and broadcasting company owned by Sam Zell and loaded with $11.8 billion in debt, is selling assets to help meet its obligations and avoid breaching loan covenants as advertising sales plummet. Novosel said his initial estimate that the Cubs would bring in about $1 billion was already eclipsed by the credit crisis. The lack of available funding may eliminate buyers for other assets as well, he wrote.

The Chicago-based company, which billionaire Zell took private last December, is ``perilously close to covenant violations'' as cash flow dwindles, said Novosel, who recommends selling the 2015 bonds.

Tribune's 5.25 percent notes due in 2015 traded yesterday at 9.875 cents on the dollar to yield 65.8 percent, according to Trace, the bond-trading service of the Financial Industry Regulatory Authority.

As far as the Cubs are concerned, Zell asked for a new set of bids by Nov. 27. The last time through that process, the bidders were reportedly topped by Mark Cuban's $1.3 billion. But because of liquidity in the economy, that deadline has been scratched, the Wall Street Journal reported on Friday.

Cuban, the owner of the National Basketball Association's Dallas Mavericks, declined to discuss whether he's still part of the process when asked by via e-mail.

Zell recently said he'd consider keeping 50 percent of the team if that would make it easier for potential buyers to get credit. But his own debt issues running the Tribune Co.'s newspaper empire make that potentially problematic.

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