On Monday, following over five hours of arguments over Chicago-based newspaper publisher Tribune’s bankruptcy, a hearing was called to an end by U.S. Bankruptcy Judge Kevin J. Carey.The debate: sue or settle with JPMorgan Chase & Co. (and other senior lenders) who provided the funds for the $8.2B 2007 buyout that made Tribune private, according to Bloomberg.
Tribune is valued at approximately $6.75B and owes about twice as much in debt, due largely in part to the buyout.
Whatever the course, the end goal is the same: “Under both plans, New York-based JPMorgan and the other senior lenders would be Tribune’s majority owners.”
In court, noteholder attorney Abid Qureshi argued that the settlement should be rejected as “there is evidence lenders knew the two-step buyout would fail before arranging the loans used to pay shareholders”:
“February 2007 projections were so “outlandish” that they weren’t taken seriously by people involved in the buyout, Qureshi said…For the publisher to meet its 2007 financial goal Tribune’s top six newspapers needed to increase weekly cash flows by 44.5 per cent, Qureshi said. At the time, analysts and media executives believed the industry had begun a long-term decline in revenue that would last 10 years, he said.”
Carey has yet to announce which plan he favours.
Tribune owns eight newspapers, including the Los Angeles Times, as well as 23 TV stations.
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