Business News
Mediator Endorses Tribune Settlement
Wednesday 29. September 2010 - Plan Allows Company to Exit Chapter 11; Litigation Trust Established to Address Fraudulent Conveyance Claims
Tribune Company announced today that it has reached agreement with Oaktree Capital Management, L.P. and Angelo, Gordon & Co, L.P. on a plan of reorganization that will settle claims surrounding “Step 1” of the company’s 2007 going-private transaction.
The settlement comes as a result of the court-ordered mediation requested by the company and overseen by U. S. Bankruptcy Court Judge Kevin Gross; it has been approved by the Special Committee of Tribune’s Board of Directors, comprised of independent members of the company’s board. Oaktree and Angelo Gordon, who will be co-proponents of this plan, both hold significant amounts of the Initial and Incremental Term Loan of Tribune Company.
“The plan addresses two primary issues that are fundamental to a successful reorganization of Tribune,” said Don Liebentritt, Tribune’s Chief Restructuring Officer. “First, it enables the company to exit Chapter 11 and distributes the equity of the reorganized Tribune and its subsidiaries to the holders of the Initial and Incremental Term Loan claims. Second, to the extent not settled prior to confirmation, all claims identified by the Examiner’s Report relating to ‘Step 2’ of the company’s going-private transaction are preserved and placed in a litigation trust. We remain confident that additional settlements will be reached.”
The Litigation Trust will allow an independent litigation trustee to pursue legal action relating to the remaining fraudulent conveyance issues alleged by various unsecured creditors, while avoiding the possible negative impact these litigation issues might have on the company’s business operations.
The plan’s settlement resolves claims associated with the financing of “Step 1” of the going-private transaction, all of which the Examiner found to have less than 50% probability of success. The settlement, which has been overseen by the court-appointed mediator, provides for Tribune Company’s senior bondholders to receive a total distribution of $300 million (approximately 23% of their claim amount) in cash plus their interest in the Litigation Trust.
Unsecured creditors of Tribune Company will receive the same percentage recovery, also in cash and an interest in Litigation Trust, which will allow them to seek redress for potential fraudulent conveyance issues. Unsecured creditors of Tribune Company’s subsidiaries will have an opportunity to receive 50% of their claim amount in cash.
The plan also provides for both Initial Term Loan Lenders and Incremental Term Loan Lenders to receive a pro rata distribution of cash, debt and equity of the reorganized Tribune and its subsidiaries pursuant to the terms of Credit Agreement.
TRIBUNE is one of the country’s leading multimedia companies, operating businesses in publishing, interactive and broadcasting. In publishing, Tribune’s leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel,Hartford Courant, The Morning Call and Daily Press. The company’s broadcasting group operates 23 television stations, WGN America on national cable and Chicago’s WGN-AM. Popular news and information websites complement Tribune’s print and broadcast properties and extend the company’s nationwide audience. At Tribune we take what we do seriously and with a great deal of pride. We also value the creative spirit and nurture a corporate culture that doesn’t take itself too seriously.