NEW YORK TIMES: Tribune has hired bankruptcy advisers as the ailing newspaper company faces a potential bankruptcy filing, people briefed on the matter said. The newspaper, which was taken private last year by billionaire investor Samuel Zell, has hired advisers including Lazard and Sidley Austin, one of its longtime law firms, these people said. Tribune has been hobbled by debt related to that sale last year, which has been compounded by the growing drought of advertising for newspapers.
While Tribune must contend with hefty interest payments over the next year, its most pressing problem is a maintenance covenant on some of its debt that limits the company’s borrowings to no more than nine times earnings before interest, depreciation and amortization.
Even if the company continues to make interest payments, failure to maintain that level of debt means technical default — which does not always lead to a bankruptcy filing. Other newspaper publishers have halted making interest payments on their debt, but have yet to file. MORE
PREVIOUSLY: Philadelphia Media Holdings earlier this week missed a Sept. 30 deadline to make interest and principal payments due on its senior loans, sources said. The company had been operating under a loan forbearance agreement that ran through Sept. 10. That forbearance was not extended.The newspaper concern has not been able to access its revolving credit due to a covenant breach. The RC was reduced to $35 million as part of the waiver agreement. Philadelphia Media in early June did not make an interest payment on a mezzanine loan after senior lenders blocked the payment because it was in violation of a senior-leverage covenant at the end of 2007. MORE
RELATED: The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits. The company has retained Cushman & Wakefield, the real estate firm, to act as its agent to secure financing, either in the form of a mortgage or a sale-leaseback arrangement, said James M. Follo, the Times Company’s chief financial officer. The Times Company owns 58 percent of the 52-story, 1.5 million-square-foot tower on Eighth Avenue, which was designed by the architect Renzo Piano, and completed last year. The developer Forest City Ratner owns the rest of the building. The Times Company’s portion of the building is not currently mortgaged, and some investors have complained that the company has too much of its capital tied up in that real estate. MORE
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