Wednesday, May 26, 2010

Tribune Co. wants to award executives another $16.2M

By: Lynne Marek May 25, 2010

(Crain's) — Tribune Co. plans to pay top executives and managers bonuses of $16.2 million when its bankruptcy reorganization plan takes effect, the company said in a court filing.

The Chicago-based company — owner of the Chicago Tribune, Los Angeles Times and broadcast outlets — said in a revised reorganization plan filed Monday that it will pay $10.3 million in incentive compensation to its top 19 executives, who earned the maximum amount possible for their performances last year, and $1.3 million to other employees who made “valuable contributions.”

Under a separate bonus program that rewards some of the same executives, another $4.6 million will be paid out to business unit leaders, the filing said.

The payouts follow a move in February to award $42 million in bonuses under the same programs to top managers for their work last year.

The compensation awards have drawn criticism from creditors in the past and could become a point of contention when the company seeks to have the plan confirmed at court hearings that begin the week of Aug. 16.

Tribune sought Chapter 11 protection in the Delaware Bankruptcy Court in December 2008, just a year after Chairman Sam Zell took the company private in a $13.8-billion leveraged buyout.

Creditors, including J. P. Morgan Chase & Co. and Angelo Gordon & Co., will take control of the company under the reorganization plan. The plan is still subject to a creditor vote and court approval.

B.U.N. Note: I don't understand what possible "valuable contributions" are worthy of a total of $ 58.2 million dollars in Executive bonuses.

How hard is it to increase your profits by laying off thousands of workers and forcing those who remain to work harder, while cutting their pay and benefits?

All it takes is hard hearts and set of corporate core values that have neither soul nor integrity.

An actual "valuable contribution" would have been if Tribune executives had bought or produced better programs and increased their profits through offering a better product rather than by cutting jobs.

- Bob Daraio, Broadcast Union News

Tribune seeks approval to send plan to creditors; some bondholders urge delay

(Reuters) - Tribune Co.sought court approval on Thursday to put its reorganization plan to a creditor vote, with objectors attacking a proposed settlement of legal claims tied to the leveraged buyout blamed for its bankruptcy.

Junior bondholders wanted the owner of the Los Angeles Times, Chicago Tribune and New York's WPIX television station to wait for a report by a court-appointed examiner before sending out the disclosure statement, which describes the plan, and ballots.
But that report will not be available until July.

An attorney for the junior bondholders, who will get nothing from the planned reorganization, told the Delaware Bankruptcy Court the disclosure statement was a garish advertisement for the settlement at the heart of the company's plan.

The company aims to include in the disclosure statement a hyperlink to the examiner's report, which will be available by July 12.

Under their plan, creditors will have until the end of July to vote.

The examiner will report on the potential value of claims the company may have against lenders, management and advisers for landing Tribune in bankruptcy in 2008, about a year after real estate developer Sam Zell took control through an $8 billion leveraged buyout.

The company has proposed releasing any potential liabilities and in return giving a stake in the company worth about $450 million to senior bondholders, who otherwise would lose their investment.

That represents a recovery for those investors of about 35 percent.

"Mr. Zell and various members of Tribune's board and senior management have significant, personal interest in seeing all LBO-related litigation 'swept under the rug,' especially when the proposed settlement does not require them to pay any amounts and also shelters them from all further litigation exposure," the junior bondholders' letter to creditors said.

The letter warned the reorganization plan would be subject to lengthy court fights if it is not a consensual plan. Other parties seemed to agree.

Holders of senior loan claims, who will get the company's equity under the proposed reorganization, doubt there is much likelihood of success of any litigation tied to the leveraged buyout.

They have argued the company is giving too much away to head off those disputes.
They also wanted the Tribune to disclose that their group is larger than the group of senior loan claimants who support the plan.

The judge, Kevin Carey, asked the parties to try to draft a letter or find a way that they could explain their differences that could be included in the disclosure statement.

Depending on the outcome of their work during the lunch break, Carey said he may have to continue the hearing on another day.

"It's been a long time since I crawled this far into the weeds on a disclosure statement," Carey said.

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