Wednesday, February 4, 2009

Tribune Co. wins right to pay $8.8 mil in bonuses

Bloomberg News

Tribune Co., the second-largest newspaper publisher in the U.S., was authorized by the bankruptcy judge at a hearing yesterday to continue or adopt employee benefit programs for non-executive workers.

Extending a program in effect before the Chapter 11 filing, Tribune won the right to pay as much as $8.8 million in performance bonuses covering work before filing for reorganization on Dec. 8.
The bankruptcy judge also gave the green light for adopting a severance plan for non-union workers. The severance plan under union contracts will remain in effect.

Given the firings before the bankruptcy and the possibility of more in the future, Tribune decided morale would be enhanced by a clearly written severance plan applicable to all non-union workers who lose their jobs involuntarily. Fired workers are to receive two weeks’ pay, plus another week for every year with the company.

Tribune was acquired in December 2007 in a $13.8 billion leveraged buyout led by Sam Zell. It listed $13 billion in debt for borrowed money and assets of $7.6 billion.

Tribune owns the Chicago Tribune, Los Angeles Times, six other newspapers, and 23 television stations, in addition to the Cubs baseball team and Wrigley Field in Chicago. Neither the team nor the field is in bankruptcy. A sale of both to Tom Ricketts is in the works.

The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District Delaware (Wilmington).


Tribune moves to adopt new severance plan
Bankruptcy judge asked to approve new severance plan for nonunion Tribune employees

Randall Chase, AP Business Writer

WILMINGTON, Del. (AP) -- A Delaware bankruptcy judge is expected to approve the Tribune Co.'s request to implement a new severance plan for nonunion employees.

Tribune attorneys said at a hearing Tuesday that they will submit a modified order for Judge Kevin Carey to sign that would provide for notice to the creditors committee and the U.S. trustee in the case before any payments are made to officers or other insiders.

"We don't intend to give them more than what the market bears at this time," Tribune attorney Kevin Lantry assured the judge.

Lantry said the company anticipates "a number of layoffs" this year, but he did not provide a figure, or details on how much money the severance program might involve.

"I hate to, in a public forum, articulate anticipated layoffs," explained Lantry, who said after the hearing that the situation is fluid and that the company's current projections could very well change.

Carey signaled that he was willing to authorize the new severance plan, as long as it included proper notice regarding payments to insiders.

"What you're asking for is a prospective blanket approval of such payments," he told Lantry. "It seems to me it's got to be conditioned on some process that lets others know what the debtor is doing."

Tribune, which owns the Los Angeles Times, Chicago Tribune, The (Baltimore) Sun, The Hartford Courant and other dailies, as well as 23 television stations and the Chicago Cubs baseball team, sought bankruptcy protection in December because of dwindling advertising revenues and a debt load of $13 billion.

According to a filing last month, the company currently employs about 14,000 full-time workers and 2,450 part-timers, about 15 percent of whom are represented by unions and subject to collective bargaining agreements.

The company is proposing a nonunion new severance policy aimed at reducing employee attrition and maintaining morale. Under the proposal, nonunion workers who are laid off would receive at least two weeks base pay for the first year of service, and a maximum of one week of additional base pay for each additional year.

The severance pay could come in the form of salary continuation or a lump sum payment and would require a waiver and general release of claims against the company by the employee. The policy would not amount to a contractual obligation of the company but would simply serve as a guideline for its business units to implement at their discretion.

An attorney representing 80 retirees of Times Mirror, which was acquired by Tribune in 2000, initially objected to the new severance program, saying his clients would suffer even more financial hardship as a result. The company said in December that it would halt deferred compensation and other payments to former workers, who essentially would have to get in line with other creditors.

"This is more than a financial restructuring involving big banks and bondholders; ... it's a bankruptcy that involves probably close to 200 retirees from Times Mirror," said attorney Jay Teitelbaum, an attorney representing about 80 retirees, including former Times Mirror Chief Executive Mark Willes. Willes reportedly is owed about $11.2 million in retirement benefits and deferred compensation.

Teitelbaum said his clients are owed a total of at least $80 million, and that virtually all of them have seen a reduction in their retirement income. He initially objected to the new severance plan for nonunion workers, saying Tribune had not demonstrated that it would be a benefit to the estate and had not addressed its impact on retirees and other creditors.

On Tuesday, however, Teitelbaum said Tribune attorneys had convinced him that the new program would be beneficial and that he was OK with it, despite his concerns about the retirees.
"They're going to suffer a more significant loss if we can't turn this company around," he noted.

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