Posted on 01/19/2009 9:38:38 PM PST by neverdem
New York Times Co. may be turning to a $US250 million ($372 million) investment from billionaire Carlos Slim as credit markets dry up and the newspaper industry confronts plummeting ad revenue.
Slim, the world's second-richest man according to Forbes magazine, is in discussions to buy 10-year notes convertible into common stock in the newspaper company and may receive a special annual dividend as high as 10% on his investment, the Times reported yesterday, citing people briefed on the talks.
New York Times has slashed its dividend and is pursuing asset sales to shore up cash. Meanwhile, it's racing to pay down debt and find the best business model for the Internet, said Richard Dorfman, managing director of the investment firm Richard Alan Inc. in New York.
``They need all of the fuel they can get to keep going,'' Dorfman said. ``It is very expensive capital and the only situations where you accept such expensive capital is where the situation is a desperate one.'' Dorfman said he sold the remainder of his stock in New York Times in December.
Catherine Mathis, a spokeswoman for New York Times, and Slim's spokesman Arturo Elias Ayub declined to comment.
The company is grappling with an industrywide migration of advertisers and readers to the Internet, coupled with a recession that's forcing US businesses to reduce marketing. Last week the Minneapolis Star Tribune filed for bankruptcy, joining Tribune Co., which sought protection from creditors on Dec. 8.
New York Times, with a $US400 million credit line expiring in May, is trying to raise $US225 million from a sale-leaseback of its Manhattan headquarters and last month said it's open to funding options including revolving debt, public offerings and private placements. The company is also seeking a buyer for its stake in the Boston Red Sox baseball team, according to a person with knowledge of the talks.
Slim's stake
Mexico's Slim, 68, held a passive 6.4% stake in the company as of Sept. 4, which made him its third-biggest investor outside of the controlling Ochs-Sulzberger family. At the time of his initial investment, Slim cited the company's ``attractive value.''
New York Times' shares closed at $US6.41 Jan. 16 on the New York Stock Exchange, making Slim's stake worth about $US58.3 million, down from $US121.2 million on Sept. 4.
He may now be taking a bigger gamble on New York Times, which has few other places to turn for the cash, Dorfman said. The deal would give Slim a regular dividend payout and place him among the company's creditors, Dorfman said.
Slim probably saw an opportunity to increase his stake in a strong brand at a favorable return, said John Morton, a newspaper analyst and president of Morton Research Inc. in Silver Spring, Maryland. For New York Times, it's money to fill the void from the credit facility while debt markets stay frozen, he said.
`Dried up'
``Credit is pretty much dried up,'' Morton said. ``It's not easy right now for anybody to borrow from banks. It's expensive, but they need the money.''
Last month, New York Times said it was in talks with lenders and doesn't plan to fully replace the $US400 million credit facility. The publisher finished the third quarter with $US1.1 billion in debt and $US46 million in cash and equivalents.
The company's board planned to meet today to approve the deal with Slim, and may make an announcement tomorrow, the Times reported. The Wall Street Journal reported Jan. 17 that Slim was in talks to invest more in the company, including a possible preferred-stock issue with no special voting rights.
Slim owns America Movil SAB, Latin America's largest mobile- phone service provider, and Telefonos de Mexico SAB, that country's biggest land-line operator.
Harbinger, Firebrand
New York Times' largest investor, Harbinger Capital Partners, and Firebrand Partners mounted a proxy fight a year ago for board seats and more investment in the main business and Internet assets. The hedge funds, which own almost 20% of the Class A stock, relented in March after the company agreed to seat two of the four directors they nominated.
In a December memo to employees, Arthur Sulzberger Jr., the company's chairman and the publisher of its flagship newspaper, called the 2009 financial outlook ``daunting.'' New York Times, the third-largest US newspaper publisher, posted a 13% drop in ad sales for the first 11 months of 2008, including a 21% plunge in November.
Sounds like Carlos has designs on a title reading “The LaRaza Times”..... ya never know.
I recall that after the dot com bust, The Slimes cut like $150 million in internet costs. That was after they had spent about $300 million on it.
It's 7 years later and they still have no clue.
yitbos
No way with the Ochs-Sulzberger whoopie special preferred stock class set up to protect the family interest. I don’t know why he is investing, they won’t improve.
Del Norte Prensa NYC edition
“New York Times has slashed its dividend”
Pinch raised the dividend to keep his relatives off his back.
They will be after him as the next Madoff on a lesser scale after they go under. Count on it.
"New York Times' shares closed at $US6.41 Jan. 16 on the New York Stock Exchange, making Slim's stake worth about $US58.3 million, down from $US121.2 million on Sept. 4."
If MexiSlim liked the Red Sox, Boston Globe and The Slymes at $12, he certainly should love them 3 mos. later at $6.41.
yitbos
Bad investment ping
FReepmail me if you want on or off my New York ping list.
Thanks for the ping!
How does one say hellow in mexican with a New York accent? LOL(a)
Hola, punk.
Die NYT, die.
Keep calling company’s who place ads in that bird cage liner.
Lets see if we can make Slim accept a 10 cent on the dollar payout for that foolish investment.
The country’s voted in a socialist as President, a stupid comedian is going to steal a Senate seat and we seem to be on a slippery slope to the left.
So why, in this environment, can’t the newspaper of record for the Left, the NYT, make any money?
How likely is it that Pinch Sulzberger is smart enough to save his family’s publishing empire? Not very, I’d say...
I hope Amarillo Slim pulls out and the evil Times closes its print edition ASAP. The sooner the better.
At these rates the Times could by borrowing from the mob.
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