By: Randall Chase
The chief financial officer for the Tribune Co., parent of The Baltimore Sun, said today that the media company is working on a business plan that will help it emerge from bankruptcy.
“We are facing very difficult cyclical and sector pressures in our key businesses,” Chandler Bigelow III said at a hearing where he fielded questions from an attorney for the bankruptcy trustee and a handful of creditors.
Bigelow nevertheless said the company is focused on reorganizing its balance sheet and capital structure and creating a platform to continue operating its businesses.
Joseph McMahon Jr., an attorney for the U.S. trustee, asked about the company’s efforts to sell the Chicago Cubs baseball team.
“We continue to work very, very hard to maximize the value of those assets and feel like we’re making progress, and we’re doing everything we can to drive liquidity into the company,” Bigelow said. “When we have something to announce, we will publicly announce it.”
Bigelow and Tribune attorneys also were tight-lipped when asked why the second of two solvency opinions issued in connection with a 2007 leveraged buyout was never made public. The buyout, orchestrated by real estate billionaire Sam Zell, resulted in the publicly traded company becoming private.
Bigelow said the buyout was conducted in two steps, the first being the establishment of an employee stock ownership plan and an initial purchase of half of the company’s outstanding shares for about $4 billion. The second step involved approval by federal regulators and the borrowing of about $3.7 billion to purchase the remaining shares.
Under questioning by McMahon, Bigelow said a solvency opinion issued in connection with the first phase, which was completed in June 2007, was made public. The second solvency report was never publicly filed.
Asked why, Bigelow deferred to Tribune bankruptcy attorney Bryan Krakauer, who indicated that the company would be willing to provide the information later.
“To the best of my knowledge, we had no obligation to publish the second step solvency opinion,” added Bigelow, who was unable to explain from whom or where he had developed that understanding.
Bigelow also was unable to provide details when asked by McMahon about the business purposes of some of the more than 100 Tribune entities involved in its bankruptcy filing, but he said officials would compile and submit the information.
Chicago-based Tribune, which also owns the Los Angeles Times, Chicago Tribune, The Hartford Courant and other dailies, as well as 23 television stations and the Cubs, sought bankruptcy protection last month because of dwindling advertising revenues. Saddled with $13 billion in debt and weak prospects for generating cash through advertising, it was the first major U.S. newspaper publisher to fall victim to the flow of advertising dollars from traditional media outlets to the Internet.
The latest sign of the struggles facing the newspaper industry came today, when Minnesota’s largest newspaper, the Star Tribune of Minneapolis, filed for reorganization under Chapter 11 bankruptcy protection.
The Tribune Co. case involves 111 of its 128 entities, with the others, notably the Cubs, not part of the proceedings. On Thursday, a judge granted the company’s second request for more time to file schedules of its assets and liabilities and other financial statements.
“We’re obviously working very hard for you to put together all the financial information,” Bigelow told McMahon, noting that the company has a “relatively decentralized” management structure.
Meanwhile, former Baltimore Sun employee Carol Randall is wondering whether she will get the rest of the money she is owed from a severance package she accepted last year.
“My payments stopped,” she told Bigelow, who gave her his business card and promised to call her next week.
“Your obligation obviously would be on our books,” he told her. “I will need to get back to you and find out exactly what the status is.”
Randall, a supplier services manager who worked at The Baltimore Sun for almost 30 years, was promised one year’s severance pay when she left in March, but she said she hasn’t received a check since November.
Randall said she was told that union-covered employees continue to get their checks, but that managers are considered creditors in the bankruptcy case. She has taken a new job in marketing to help make ends meet.
“I wasn’t planning on working,” said Randall, 54. “I thought I was done.”