Friday, August 14, 2009

Sam Zell Would Be Out at Tribune in Creditor Reorganization Plan

Sam Zell may be on his way out at Tribune Co., after taking the company private in 2007 and then taking it into Chapter 11 bankruptcy, the Chicago Sun-Times reports.

Citing sources, the paper said a bankruptcy reorganization plan being hammered out by creditors would push Zell out. The creditors could then sell off Tribune’s broadcast stations and newspapers.

Zell still has court granted rights to file his own reorganization plan first, with a deadline of Nov. 30.--Elizabeth Jensen

Zell Out


"The banks will be in charge," one insider says of Zell's possible departure.

Real estate magnate Sam Zell is on his way out of the Tribune Company, according to the Sun-Times.

Zell, a billionaire investor who took over the Tribune in 2007, mismanaged the privatization of the company and added too much debt at the beginning of a recession and at a trying time for newspapers, which are hemorrhaging advertising revenue.

"This was a textbook case of a leverage buyout gone bad," William Brandt Jr. president of Development Specialists Inc. a corporate turnaround expert not involved in the case, told the Sun-Times. "These were imbeciles who had no idea what they were doing."

The company was forced into Chapter 11 bankruptcy eight months ago, and as it gets ready to emerge from that status, creditors, who have grown impatient with Zell's stewardship are working on a plan that ousts him from power.

"The banks will be in charge," one insider told the Sun-Times.
The Tribune Company owns the Chicago Tribune, the L.A. Times, WGN-TV along with other newspapers and television entities.

"Since going private, we have re-engineered many of our existing products and introduced new ones, expanded our local news programming, dramatically reduced our expenses and positioned the company to succeed in the face of an extremely difficult ad environment and a worsening economy,” Tribune spokesman Gary Weitman told the Sun-Times.

“[Zell and other managers] remain actively engaged and committed to Tribune. The restructuring is still in progress and we continue having positive discussions with our various creditor constituencies. It is premature to speculate about the company's final ownership structure."

Zell Headed Out?

By Mark Lacter • BioEmail

Chicago Sun-Times is reporting that Tribune Co. creditors apparently have had enough of CEO Sam Zell and are working on a reorganization plan that would essentially break up the company and get him out. Story lacks detail and the process is still ongoing, but there have been rumblings in recent weeks that the creditors want out.

Before they can file a reorganization plan, however, the company must be given a chance to submit its own plan. A bankruptcy judge has given Tribune until Nov. 30 to do so.

William Brandt Jr., a corporate turnaround expert not involved in the case, said enough time has passed so that creditors and the debtor want to cut losses and save face. He said an honorable exit is especially important to Zell, who might need investment banking help for future deals.

Still, Tribune financial reports filed with the bankruptcy court show recent improvement. The company's cash on hand rose to $740.5 million as of June 28, up from $702 million in late May. It reported profitable operations in June aside from debt obligations, but for the period from Dec. 8, 2008 to June 28 it said it lost $836.5 million. The numbers don't include units such as the Cubs, which were left out of the bankruptcy filing.

No comments: