New York Times raises $225 million from headquarters sale
09 Mar 2009
The New York Times said today that it has eased its debt burden by raising $225 million through a sale-leaseback of part of its Manhattan headquarters building and is still on the lookout for a buyer for its Boston Red Sox team and other assets.
Loaded with a debt of more than $1 billion at the end of 2008, the Times Company has been able to substantially reduce the debt after Mexican billionaire and telecommunications czar, Carlos Slim Helu pumped $121.2 million by acquiring 6.4 per cent stake in the company. (See: Mexican telecom tycoon Carlos Slim acquires 6.4 per cent stake in New York Times)
The New York Times signed a sale-leaseback agreement with a New York-based investment management company W P Carey and Co, for 15 years, where it can exercise the option of buying the building back after 10 years for $250 million.
It said that although W P Carey's core business is corporate financing, and not real estate, the transaction should be seen as a corporate loan with the headquarter building kept as collateral.
But the tabloid woes have not ended, as it still has to make a $49.5 million payment in November, which is the principal amount of its long-term borrowing as well as $250 million due in March, 2010.
The 52-story building, designed by Italian architect Renzo Piano and completed in 2007, is owned 58 per cent by Times company while the developer, Forest City Ratner Companies, owns the rest and Times will be paying a lease of $24 million a year for 21 floors or 750,000 square feet of space with the rental payment escalating through the term of the lease.
In December, it tried to hive off The Boston Globe newspaper and its 17.8 per cent stake in the Red Sox baseball team but the current economic depression in the US made buyers shy away from buying them.
In November, the Tribune Company had reported a big third quarter loss of $121.6 million due to decline in advertising revenue caused by economic slowdown, restructuring charges and a steep rise in interest costs. (See: Tribune posts third quarter loss of $121.6 million)
The biggest ad declines came in the sectors which bore the brunt of the economic downturn - retail outlets, furniture and hardware stores and department stores, automobiles, telecom services and movies.
