Mexican billionaire Carlos Slim is in talks to invest a few hundred million dollars in the New York Times (NYT), the WSJ says.
This amount won’t save the company, but it will buy it time. And with that time, perhaps, management will finally realise that the only sustainable way out of this nose dive is to radically cut costs.
WSJ: The New York Times Co. is in discussions with Mexican billionaire Carlos Slim about investing in the newspaper publisher to help ease its financial problems, according to people familiar with the matter.
The talks are ongoing and may yet fall apart but one of the options being discussed is a preferred-stock issue. Under this scenario, the Times Co. would issue Mr. Slim preferred stock, which carries no voting right but pays an annual dividend, in return for his investment. The investment would be similar to a loan. Preferred shares are often convertible into common stock after a defined period.
It’s not clear how much Mr. Slim would be willing to invest but the people familiar the matter said it would likely be several hundred million dollars.
Times Co. is said to be planning a special board meeting next week.
The sale of preferred stock won’t immediately dilute common stockholders (preferred is more like debt), but the dividend will siphon off more precious cash flow. And if the preferred ever converts to common stock, shareholders will get diluted. (Same if the company is sold: The debtholders and Carlos will get all their money back before common shareholders see a penny).
But $300 million would be quite helpful right now.