Strapped for cash amid the financial crisis, the New York Times struck a deal with the world’s second-richest man, mobile-phone magnate Carlos Slim, who made a $US250 million investment.
That bought the Times some time — it didn’t have to hawk chunks of its business as both newspapering and the economy at large crumbled fast.
It wasn’t exactly like Slim needed the cash, but it turned out to be a pretty sweet deal for him. Bloomberg’s Edmund Lee reports that Slim’s profit from the loan stands at $US263 million when you factor in interest, premiums, and warrants.
[Slim] already has earned $US122 million from his loan to the Times, based on an annual interest rate of 14 per cent and a 12 per cent premium charged to the company when its debt to Slim was redeemed in 2011. Under the terms of the loan, the Times still owes Slim additional shares worth as much as $US141 million based on the Jan. 17 stock price, thanks to options he received to buy shares at what is now a deep discount.
Interestingly, if Slim wants to keep his shares, he would own a fifth of the Times Co., Lee notes.
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