Tuesday, October 12, 2010

Tribune Announces Settlement With Official Unsecured Creditors Committee and Major Senior Lenders

Expanded Settlement Endorsed by Mediator

CHICAGO, Oct. 12 /PRNewswire/ -- Tribune Company announced today its support for an agreement reached by its Official Committee of Unsecured Creditors, Oaktree Capital Management, L.P., Angelo, Gordon & Co, L.P., and JPMorgan Chase Bank, N.A. on a plan of reorganization that will settle certain claims surrounding both "Step 1" and "Step 2" of the company's 2007 going-private transaction.

This settlement expands upon the previously-announced settlement with Oaktree and Angelo Gordon with respect to Step 1, and comes as a result of the court-ordered mediation overseen by U. S. Bankruptcy Court Judge Kevin Gross.
The settlement has been endorsed by Judge Gross as mediator and approved by the Special Committee of Tribune's Board of Directors, comprised of independent members of the company's board. Oaktree, Angelo Gordon, and JPMorgan hold significant amounts of the Initial and Incremental Senior Loans of Tribune Company, and the Official Committee represents the interests of all unsecured creditors in the Tribune bankruptcy cases.

"With the able assistance of Judge Gross, we continue to achieve success in our mediation efforts, and are pleased to have now expanded the plan settlement to include the Official Committee of Unsecured Creditors," said Don Liebentritt, Tribune's Chief Restructuring Officer. "The additional value being allocated to our bondholders and other unsecured creditors represents a fair and equitable settlement for all of our constituencies. We remain confident that Tribune continues on a path toward resolution of its Chapter 11 cases that maximizes the value of the bankruptcy estates, preserves all stakeholders' legitimate entitlements and enables the company to conclude its bankruptcy proceedings as soon as possible."

An important component of the new settlement is the contribution of $120 million in cash by recipients of pre-bankruptcy payments on the Incremental tranche of the Tribune Senior Loan and the Bridge Loan facilities through an optional settlement of those claims, with the arrangers for those facilities providing a backstop to ensure that the estates receive the full settlement payment on the plan's effective date.
This additional settlement payment, together with additional contributions by holders of the Senior Loans, allows for Tribune's bondholders to receive $420 million, representing 32.73 cents on the dollar upon emergence plus their interest in a litigation trust, and provides for trade creditors of Tribune's operating subsidiaries to be paid in full.

As with the previously-announced settlement, this agreement allows for the distribution of the equity of the reorganized Tribune and its subsidiaries pro rata to the holders of the Initial and Incremental Senior Loan claims.

In addition, claims and causes of action against various parties (including advisors, directors and officers involved in the 2007 transactions) will be preserved and placed in a litigation trust and pursued for the benefit of creditors of Tribune. The first $90 million of recoveries from the trust will be allocated to Tribune's general unsecured creditors, including its bondholders. The litigation trust will allow an independent litigation trustee to pursue legal action relating to the remaining fraudulent conveyance issues alleged by various unsecured creditors, while minimizing the possible negative impact these litigation issues might have on the company's business operations.

The company intends to file a plan of reorganization and disclosure statement incorporating both settlement agreements with the U.S. Bankruptcy Court for the District of Delaware by Friday, Oct. 15.

SOURCE Tribune Company

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