Tribune Staff Would Bear Risk in Financing Buyout (Dinosaur Media DeathWatch)

The Wall Street Journal ^ | April 2, 2007` | Theo Francis

[abb]

The best thing about an employee-stock-ownership plan is that it gives workers a stake in their company's future. Which is also the worst thing about it.

That may never be more apparent than in the $8 billion sale of Tribune Co. Chicago real-estate magnate Sam Zell is vying against the duo of Los Angeles businessmen Ron Burkle and Eli Broad. Both propose using an ESOP representing Tribune's 21,000 employees to take a majority stake in the company. While use of an employee share plan offers the company's suitors a powerful tool to finance the deal, including attractive tax breaks, it can pose significant risks for the company as well as its employees.

snip

Financing a deal in part with an ESOP works because the employee-benefit plan invests almost exclusively in the employer's shares. And because ESOP deals can involve the newly private company going heavily into debt, employees can see their retirement benefits eroded if the business is hurt by an industry downturn. That is a real danger for Tribune, owner of the Los Angeles Times, Chicago Tribune, Newsday of Long Island and a string of other newspapers and TV stations, struggling to cope with a severe slump in the newspaper business.

Some major ESOP transactions have foundered, perhaps most notably at United Airlines. In 1994, the airline's pilots, managers and machinists acquired 55% of the company through an ESOP in return for six years of wage and benefit cuts, part of an effort to save jobs. Labor-management tensions remained high, however, and ESOP consultants say too little effort went into fostering a cooperative workplace. Employees lost control of the company in 2003, and United employees lost much of their stakes as the airline the industry struggled after the Sept. 11, 2001, terrorist attacks.

snip

[abb]

[abb]

Raoul's First Law of Journalism
BIAS = LAYOFFS

[abb]

Ping

[abb]

also:

Tribune could try to tap employees' existing 401(k) accounts for capital in the transaction as well, by offering employees a chance to roll those assets into the ESOP, effectively investing alongside those taking the company private -- and compounding the risk the employees take on in the process. Tribune's 401(k) plans had more than $2.3 billion in assets at the end of 2005, including nearly $610 million already invested in Tribune shares.

[RichInOC]

TRIBUNE TO END TODAY
Editors and Writers To Suffer Most

[abb]

Not a very far-fetched headline. And the basturds are trying to suck the yolk out of the employee's nest eggs.

[ken21]

the u.s. leftist media is not dead yet.

they helped elect a democrap u.s. congress.

and, they'll help elect a democrap president in 2008.

[abb]

http://online.wsj.com/article/SB117547208104356327.html?mod=home_whats_news_us

Tribune Appears
To Be Nearing
A Deal With Zell
By SARAH ELLISON
April 2, 2007

After months of drama in its boardroom and declining performance at its newspapers, Tribune Co. late yesterday appeared to be firming up a deal to sell itself to Chicago real-estate tycoon Sam Zell, according to people familiar with the matter.

Over the weekend, Tribune's special committee of the board reviewed competing offers from Mr. Zell and a joint bid from Los Angeles businessmen Eli Broad and Ron Burkle. Both offers propose taking the company private using an employee stock ownership plan. (See related article.)

To be sure, it was possible the board could decide to further extend its self-imposed deadline of March 31 and take more time to reach a decision. And final important details remained to be ironed out. But people close to the discussions said that Mr. Zell's offer -- which is valued at $33 a share -- was preferred. Tribune's shares traded up 58 cents Friday to $32.11 on the New York Stock Exchange.

snip

Mr. Zell is expected to put in less than $300 million in equity, a fraction of the company's total value of about $7.9 billion, not counting Tribune's existing $4.5 billion in debt. The deal will unfold in two steps, according to a person familiar with its structure. In the first step, Mr. Zell will invest his equity and receive convertible preferred stock in Tribune. Then, Tribune would borrow money and pay out about $17.50 a share to shareholders. If approved, the company would be taken private, with shareholders receiving an additional payout and the majority of the company being held by an employee stock ownership plan, which would roll future contributions to employee 401(k) funds into the ESOP, effectively providing capital for the buyout without increasing Tribune's debt.

snip

[Uncle Hal]

Gee, under this plan an employees investment in the company could be hurt by an industry downturn. Gosh I do not see a downturn on the horizon in the newspaper business.

[SC Swamp Fox]

[jwh_Denver]

LOL! Only a vulture(s)would go after dead meat.

[potlatch]

[az_gila]

also:

Tribune could try to tap employees' existing 401(k) accounts for capital in the transaction as well, by offering employees a chance to roll those assets into the ESOP, effectively investing alongside those taking the company private -- and compounding the risk the employees take on in the process. Tribune's 401(k) plans had more than $2.3 billion in assets at the end of 2005, including nearly $610 million already invested in Tribune shares.

- - - - - - - -

I wonder how much of the employee's 25% of the 401k plan was a voluntary portion?

[Milhous]

ROTFL.

[potlatch]

Lol, you've seen them all before but I think I finally put them in the proper sequence!!

[devolve]

I recall convicted mega-felon Marc Rich (Please pardon me Slick Willie!) ripped of all his companies for billions and ran away to Switzerland.....

A few dinky millions in (under the sheets) bribes to Slick Willie's Little Rock library and master criminal Mark Rich was free as a bird

Rich's ex-wife/baglady Denise Rich stopped by the White House for a few late night dates and sealed the deal.....

Plan on more hidden millions of Marc Rich's stolen looting of American companies and American workers pensions being funneled to Hillary's campaign......

Also plan on millions from Muslim countries covertly financing Hillary while getting around Campaign Finance Reform and Federal Election Campaign laws.....

(Recall the American "Museum" Council contributions to Hillary?)

Hugo Chavez will also funnel secret millions to Hillary -

"I want to take those profits...."

"We're going to take things from you...."

"I could hardly breathe...."

"I can't recall...."

"....Vast Right Wing Conspiracy...."

--

Those here on FR tearing down Republican candidates will forever be remembered as "Losers for Hillary" -

Any corporation (or CEO, etc.) backing Hillary, O'Bomber, Joni Edwards should be boycotted - preferably pick one TV network, Hollywood studio, product manufacturer, car manufacturer and boycott them 100% - Bankrupt them and wake up the others!

Anyone going with or engaged to someone backing Hillary, Obama, or John Edwards should dump them instantly -

Anyone married to someone backing Hillary, Obama, or John Edwards should tell them they are divorcing them (give your money and assets to a safe place ASAP) - You cannot trust them!

--

Senator Webb will be a huge asset to Hillary as her "enforcer" in the campaign - another "special" illegal handgun carrier in Washington DC - like Vince Foster....

[potlatch]

Excellent commentary devolve, you always know the facts.

I did get a snicker out of one comment but DON'T HOLD BACK!!

The Clintons are experts at hiding their money sources. In face Bubba is witholding info about his library right now.

[abb]

update

http://www.nytimes.com/2007/04/02/business/media/02tribune.html?_r=1&ref=business&oref=slogin

Real Estate Tycoon Increases Bid for Tribune
By ANDREW ROSS SORKIN and KATHARINE Q. SEELYE
Sam Zell, the Chicago real estate tycoon, took another step toward winning the auction for the Tribune Company late last night when he agreed to raise his bid at the urging of the company's board, according to people close to the talks.

The board had indicated that if Mr. Zell were to make a high enough offer, it would be prepared to sell its 160-year-old media empire to him.

Mr. Zell had been outbid by the team of Ronald W. Burkle and Eli Broad, two Los Angeles billionaires, but the company seemed more eager to turn the company over to Mr. Zell. His offer is further along and could be finished more quickly, these people said. In addition, the board would prefer to sell the company to a Chicagoan like Mr. Zell, rather than to people with ties to Los Angeles, where disputes between Tribune and its largest newspaper, The Los Angeles Times, have been played out on the public stage.

Last week, Mr. Zell's bid of $33 a share, which he already increased once, had been $1 below the Burkle-Broad bid, which is valued at about $8.1 billion. On Friday afternoon, Tribune executives told Mr. Zell that he would have to offer them more money if he wanted to buy the company, the people said; Mr. Zell came back with a new bid of close to $34 a share.

snip

[abb]

http://www.chicagotribune.com/news/local/chi-070401tribune-zell,1,6396203.story?coll=chi-news-hed

Tribune board weighs Zell's new offer By Michael Oneal and David Greising Tribune staff reporters Published April 2, 2007, 1:26 AM CDT

Tribune Co.'s board of directors negotiated late into Sunday night on a deal aimed at handing control of the 159-year-old Chicago Tribune and other major media properties to maverick Chicago billionaire Sam Zell for $13 billion.

snip

The fact that Tribune's auction dragged on for nine months with a dearth of serious bidders speaks volumes about how the rest of the world views the outlook for traditional media properties in an increasingly digital world.

snip

"The amount of debt Tribune is going to have blows my mind," said one of them, noting that he's expecting three years of cash flow declines as once-loyal advertisers rush to get online. "It seems very dangerous to me."

Many observers have speculated that Zell's only exit from the danger zone will be to continue the cost-cutting, job-slashing and asset-shuffling that has caused so much angst in the newspaper industry. snip

[abb]

This just in...

http://online.wsj.com/article/SB117551431653956734.html?mod=home_whats_news_us

Zell Wins Auction for Tribune
By DENNIS K. BERMAN and SARAH ELLISON
April 2, 2007 7:50 a.m.

Chicago investor Sam Zell has won the bidding for Tribune Co., according to a person familiar with the company's six-month old auction.

Exact terms should be disclosed this morning, this person said. They include a low break-up fee, which would encourage the partnership of Eli Broad and Ron Burkle to pursue a still higher offer, if they choose. The two Los Angeles investors had been trying to unseat Mr. Zell at the last moment, but could not do so in a way that satisfied Tribune's board.

After six months, it appeared that Tribune's board was finally in the place it had been trying to reach: running a real auction. A letter last week from Messrs. Burkle and Broad, proposing a deal valued at $34 a share, pushed Tribune's special committee to try to extract better terms from Mr. Zell, whose offer was valued a dollar less per share than that of Messrs. Burkle and Broad. At the same time, the board demanded better contract terms from the Broad-Burkle team.

Representatives from the Broad-Burkle camp appeared resigned over the weekend to Mr. Zell's likely success. "They just don't want to do [a deal] with us," said a person familiar with the duo's thinking, referring to Tribune's board. The special committee had asked for additional information from Messrs. Broad and Burkle Friday, but the joint proposal isn't as far along as Mr. Zell's, this person said. The pair requested a merger agreement from the company and expressed surprise that they didn't receive one, according to a person familiar with their thinking.

snip