Report: Tribune Says It Expects Changes; Debt Reduced

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Tribune Co., owner of the Orlando Sentinel, said in an internal memo that its ownership will likely change as it emerges from bankruptcy protection.
A report from The Wall Street Journal states that the note informed employees that even though the ownership structure of the company will change, current operating management intends to stay in place during and after restructuring.

The Thursday note to workers came from Tribune Chief Operating Officer Randy Michaels, the Journal reports. Citing two people close with negotiations, the Journal also reports what the New York Post has reported this week -- that Tribune lenders will end up owning most of the company. The move will shrink the company's debt by 90 percent.

The Post reported this week that creditors who seek to oust Tribune CEO Sam Zell probably won’t keep the employee stock ownership plan either. The Post, citing a source familiar with the matter, states that Zell is close to leaving the company.

Zell owes these creditors $8.6 billion. However, the Journal reports that Zell and other executives have convinced the lenders that Tribune will never return to the profit levels it once saw. They’ve convinced the creditors to cut the debt down to $500 million from $8.6 billion.

The Journal reports that the lenders include Deutsche Bank AG, JP Morgan Chase & Co. Angelo Gordon and Avenue Capital. No solid reorganization plan has been reached, the report states.

Michaels’ note on Thursday releases the most details on Tribune and the rumors since June.

Michaels told employees that Tribune hopes to have a reorganization plan fleshed out by fall, the report states.

Tribune Aims To Give Competitive Wages - Memo

http://www.reuters.com

Aug 21 (Reuters) - An internal memo at Tribune Co (TRBCQ.PK) said the bankrupt media company was working to provide market-level competitive wages for employees and sought to allay employee concerns.

"It would be absurd to think that this company will be 'liquidated'," Tribune Chief Operating Officer Randy Michaels wrote in a letter to employees, which was obtained by Reuters.

The company's ownership structure is likely to change, but the current operating management intends to remain in place during and after the restructuring, Michaels said.

Earlier this week, the New York Post reported that Tribune Chief Executive Sam Zell was close to giving up his claims to buy a 40 percent stake in the company.

Tribune, which owns the Los Angeles Times, Chicago Tribune and other U.S. papers, filed for bankruptcy last December.

Tribune could not immediately be reached for comment by Reuters outside regular U.S. business hours.

(Reporting by Robert MacMillan in New York and S. John Tilak in Bangalore; Editing by Muralikumar Anantharaman)

Tribune Expects Changes

By SHIRA OVIDE
The Wall Street Journal

Tribune Co. said its ownership is likely to change as the newspaper-and-television company emerges from bankruptcy-court protection, a shift that people familiar with the matter say would likely put the company in the hands of its lenders and shrink primary debt by more than 90%.

In a note Thursday to employees, Tribune Chief Operating Officer Randy Michaels said "the ownership structure of the company is likely to change." He added that "current operating management is committed, and intends to remain in place during and after the restructuring."

Two of the people familiar with the matter said Tribune's senior lenders are likely to end up owning nearly all of the equity in a reorganized company, with a small amount reserved for Tribune management, employees and unsecured debtholders.

Mr. Michaels's note is the most details Tribune has released about its fate since the company entered bankruptcy protection in December. The collapse made the Chicago-based company the poster child for the decline of the newspaper industry.

Samuel Zell, the real-estate mogul who in 2007 led a debt-heavy buyout of Tribune, came in promising to revive the moribund newspaper industry. Instead, the bankruptcy taints Mr. Zell's reputation as an investor able to a turn big profit from troubled companies.

At least four other newspaper publishers have filed for bankruptcy protection since December.

The possible ownership change caps a nearly two-year saga that began when Mr. Zell closed a deal for Tribune, the owner of newspapers including the Chicago Tribune and Los Angeles Times, a string of 23 local-television stations and the Chicago Cubs baseball team.

The foundation of Mr. Zell's hold on Tribune is a warrant that entitles him to buy as much as 40% of Tribune's equity for at least $500 million. Two of the people familiar with the matter said his warrant is likely to be wiped out in the bankruptcy process.

It is unclear whether Mr. Zell would remain involved in Tribune after it emerges from bankruptcy. One of the people familiar with the matter said while Mr. Zell might not stay as CEO, it is logical for him to remain on Tribune's board, in part because he has hand-picked nearly all of Tribune's top management.

Mr. Zell was out of the country Thursday and couldn't be reached, a spokeswoman said.

Mr. Zell and other Tribune executives have convinced creditors that Tribune can't return to earlier profit levels, and the company needs to substantially reduce debt. Senior lenders have agreed to cut their debt to roughly $500 million from $8.6 billion, according to the people familiar with the matter.

The diverse group of senior lenders include Deutsche Bank AG, JPMorgan Chase & Co., distressed-investment firm Angelo Gordon and Avenue Capital.

Bankruptcy talks are fluid, and a final plan hasn't been reached, people familiar with the matter say. The company's creditors may be offered some compensation other than equity, according to two of the people familiar with the matter. Tribune has a pending agreement to sell its Chicago Cubs and related assets for about $900 million, and the money could be funneled directly to creditors, one of these people said.

Mr. Michaels said the Tribune bankruptcy negotiations are a "slow process because we and they are trying to be very deliberate." Mr. Michaels said Tribune hopes to have a restructuring plan "fully fleshed out" this fall.

Write to Shira Ovide at shira.ovide@wsj.com