Debt Holders May Hang Up Tribune's Going-Private Deal

By: Mark Fitzgerald Hedge funds holding more than $690 million in Tribune Co. debt have declared the company in default, which could force an early repayment of $1.26 billion in bonds just as the Chicago media giant takes its final steps towards going private.

In a filing with the U.S. Securities and Exchange Commission (SEC), Tribune said it had received a series of letters from an attorney claiming to represent three hedge funds who own 55% of a $1.26 billion in bonds known as PHONES.

The hedge funds say Tribune violated a covenant of the bond issue due May 2029 by selling three television stations earlier this year, and by announcing plans to sell the Chicago Cubs after the current baseball season. A default, if upheld, entitles holders to be repaid immediately at full value.

In its reply to the attorney of the unnamed hedge funds, Tribune said, the company argued that the a part of the bond covenant allows it to dispose of operations as it sees fit. It also argues that the funds are not "holders" under the covenant with the power to declare a default.

"The company believes that the hedge funds' claims are without merit and that the company remains in full compliance with Section 10.05 of the PHONES Indenture," Tribune said. "The company will enforce and defend vigorously its rights under the PHONES Indenture."

Tribune earlier this month completed the first step in the $8.2 billion deal led by Sam Zell to take Tribune private by completing a tender offer.


No comments on this item Please log in to comment by clicking here