Tribune Co. directors came away with no decisions made after meeting in Chicago yesterday to consider offers for the company generated by a four-month auction process that ended last week.
After the meeting, Tribune, which owns The Sun, issued a statement saying the independent special committee formed to oversee management's effort to create additional shareholder value was considering the offers that came from outside bidders as well as strategies the company might enact independently.
"We are carefully considering all alternatives for creating additional shareholder value," said William A. Osborn, chief executive of Northern Trust Corp. and Tribune's lead independent director.
Sources close to the situation said Friday that Tribune might be leaning toward a so-called self-help strategy that could be built from a combination of tactics. Options mentioned have included taking on a substantial amount of debt to fund a special dividend, selling or spinning off Tribune's broadcast assets and perhaps taking the rest of the company private in a smaller leveraged buyout than was originally anticipated.
Although many risks and hurdles are associated with these options, the sources said the self-help route had gained currency since the offers generated by Tribune's auction were less than appealing.
Tribune, which also owns the Chicago Tribune, Los Angeles Times and other media assets, received an offer valuing the company at $31.70 a share from California's Chandler family - which is Tribune's largest shareholder, with a 20 percent stake. This offer would divide the company in two and give existing shareholders $19.30 in cash and new shares in a broadcast company valued at $12.40 apiece. The Chandlers and several private equity sources would take over the newspapers.
Wall Street skeptics have said the Chandlers might have overvalued the broadcast assets.
The company received a second offer from Los Angeles billionaires Eli Broad and Ron Burkle valuing the company at $34 a share. (Friday's close was $30.52.) This would include a $27 per share dividend funded by $500 million in new equity and $9.8 billion in fresh debt. But several analysts said last week that this would risk over-leveraging the company.
Tribune also received an offer worth more than $4 billion for the broadcast assets from the Carlyle Group, a private equity firm in Washington.
One source with knowledge of the situation said strategic buyers have shown interest in other parts of the company. Gannett Co., he said, is looking at Tribune's newspapers in Stamford and Greenwich, Conn.
Most observers expect Tribune's board to keep negotiating with the various third parties while perhaps looking for other sources of capital to help fund a self-help strategy. Asset sales to buyers such as Carlyle and Gannett could provide cash. Also, one source said last week that Chicago private equity firm Madison Dearborn Partners, which withdrew from the original bidding process, might be interested in re-engaging. The McCormick Tribune Foundation, a nonprofit charitable organization with ties to management, might also consider putting its 13 percent stake in the company behind a bid, another source said.
The special committee supplied no timetable for giving a recommendation to the full Tribune board. But the company reiterated yesterday that the board expected to make a decision during the first quarter.
Michael Oneal writes for the Chicago Tribune.