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Report: Zell Could Lose Control of Tribune Co

Magazine article Editor & Publisher

Report: Zell Could Lose Control of Tribune Co

Article excerpt

Tribune Co. and the creditors that hold its $8.6 billion in debt are talking about a plan that could wrest control of the Chicago-based media giant from billionaire Sam Zell, the flagship Chicago Tribune reported Sunday.

According to the report by Chicago Tribune business reporter Michael Oneal, Tribune and its banks and investors are looking at a plan that would involve "a debt-for-equity swap that probably would give the senior lenders a large majority ownership stake in the reorganized company."

Quoting an unnamed "source with knowledge of the situation," the Tribune said the plan would do away with the warrant Zell has that gives him the right to buy 40% of the company for $500 million. The warrant is the basis of Zell's control of Tribune, whose ownership is structured as an employee stock ownership plan (ESOP). Zell spent $90 million for the warrant in the $8.2 billion transaction that took Tribune private in December 2007.

In a statement, according to the Tribune account, Tribune Co. …

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