Tribune reaches deal with major creditors to exit bankruptcy

Tribune Co, the second-largest newspaper publisher in the US said yesterday that it had reached a deal with its major creditors and lenders that will help it emerge from bankruptcy protection later this year.

Chicago-based Tribune, owner of 10 daily newspapers and operator of 23 television stations, which had filed for bankruptcy protection in December 2008, said in a statement that it has arrived at a deal with its major creditors, JP Morgan, Angelo Gordon & Co, Centerbridge Partners and the Official Committee of Unsecured Creditors.

Under the proposed deal, major lenders will get 91 per cent stake of the company and creditors would get a combination of cash, debt and stock as repayment of their claims.

Financial firms, JP Morgan and Angelo Gordon & Co will take a 91-per cent stake in the company, while Centerbridge, holder of 37 per cent of the company's outstanding debt, would get a 7.4-per cent stake in Tribune, which would be paid in a combination of cash, stock and debt.

Tribune said that the proposed deal, which has been filed before the court for its approval, will also settle all potential claims arising from the $8.2 billion highly leveraged buyout of Tribune by the colourful real-estate billionaire Sam Zell in 2007. (See: Tribune goes private; Sam Zell named chairman and CEO)

But the settlement has not taken into account the small bondholders, represented by Wilmington Trust Co., which holds $1.2 billion in Tribune bonds.