Reporter Josh Kosman, citing an unnamed "source familiar with the matter," wrote that Zell "appears to be ready" to give up the warrants that give him the right to buy as much as 40% of Tribune for $500 million. He will give up the warrants without being compensated, according to the Post report.
The Post quoted a Tribune spokesman as saying "Sam, as well as the rest of the management team, remain actively engaged and committed to Tribune." The spokesman added it was premature to speculate about the company's "final ownership structure" since it has yet to file, let alone get bankruptcy court approval, for a restructuring plan.
Zell took Tribune private in a deal structured around an employee stock option plan (ESOP) in a buyout that left the company with about $13 billion in debt. When the recession aggravated the newspaper industry's advertising woes, the publisher and broadcaster sought bankruptcy protection in December 2008.
The Post also reported that creditors holding subordinated debt "are maneuvering to get paid before senior creditors do, arguing that the latter's financing role caused the company to become immediately insolvent as a result of the deal."
These junior creditors are also hoping to claim the fees paid to banks who structured the buyout.
By: E&P Staff Tribune Co. Chairman and CEO Sam Zell "is ready to walk away from the company," giving up his claims to a 40% stake in the Chicago media giant he took private in December 2008 only to take it into bankruptcy a year later, according to a report Tuesday in the New York Post.