Tribune Co. Reaches Agreement With Its Creditors on Plan to Exit Bankruptcy

By: E&P Staff

Ending 16 tumultuous months of Chapter 11 negotiations with its creditors — often punctuated by threats of litigation and even a “nuclear option” warning — Tribune said late Thursday that it had reached agreement with its lenders on a reorganization plan to exit bankruptcy.

Under the plan, holders of senior notes would get a 7.4% slice of Tribune’s distributable assets, which would be paid out in a combination of cash, debt and stock.

Senior credit facility lenders will get, essentially, the rest of Tribune, a greater than 91% stake in the reorganized Chicago media giant.

Tribune, reeling under $12 billion of debt, will be “significantly deleveraged” on the other side of bankruptcy, a company statement said.

Here is the full text of the Tribune announcement:

Tribune Company today announced an agreement supported by major creditors J.P. Morgan and Angelo Gordon, lenders under the company?s prepetition senior credit facility, and Centerbridge Partners, holder of approximately 37 percent of the company?s outstanding prepetition senior notes, proposing to settle all potential claims arising from the company?s going-private transactions in 2007.

The terms of the agreement, which also has the support of the Official Committee of Unsecured Creditors, will be incorporated into a plan of reorganization for Tribune and its debtor affiliates, to be filed with the U.S. Bankruptcy Court for the District of Delaware. ?The company supports the resolution of our bankruptcy through a plan of reorganization that implements the terms of this agreement. The plan will allow us to resolve these cases without the distraction, expense and delay of protracted litigation, and is in the best interests of Tribune and all of our constituents,? said Don Liebentritt, Tribune?s Chief Legal Officer.

?We?re very pleased that an agreement has been reached, and we appreciate the support we?ve received from J.P. Morgan, Angelo Gordon, Centerbridge and the Committee,? said Randy Michaels, Tribune?s Chief Executive Officer. ?This will enable us to file our plan prior to next Tuesday?s court hearing. It is another significant step forward as we continue to transform our media businesses, attract and retain talented people, and seize opportunities to grow.?

Under the plan, the holders of the senior notes would receive 7.4 percent of the company?s distributable value, which would be paid in a combination of cash, debt and stock. The company?s senior credit facility lenders would receive cash and debt, and stock representing in excess of 91 percent of the equity of the reorganized company. Under the plan, the company would emerge from bankruptcy, significantly deleveraged, with its business units intact and with adequate liquidity for operating and capital needs. Once filed, the plan will be subject to a creditor vote and approval by the Court.

Material terms of the agreement have been filed with the Bankruptcy Court.

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