Tribune buyout plan wins shareholder OK

The Baltimore Sun

CHICAGO -- Tribune Co. shareholders yesterday formally approved the company's $8.2 billion plan to be taken private, with 97 percent of the shares voted cast in favor of the $34-a-share buyout led by a group that includes Chicago real-estate mogul Sam Zell.

The Chicago media holding company, whose properties include The Sun, had tentatively agreed to the complex plan earlier this year.

1st phase completed

The first phase of the plan, in which about half the company's shares were bought back at the $34 price, has already been completed.

Before the company can consummate the second, final leg of the deal, however, shareholders had to provide their formal approval.

Shareholder approval has largely been treated as a given. But because of worsening newspaper industry conditions and because credit has grown costlier and harder to find since the deal was unveiled, Wall Street is far from convinced the deal will go through, at least at the $34 price.

Below $25

Tribune stock last week fell below $25 a share, providing evidence that the stock market thinks that a lower price will emerge for the second half of the buyout or that the proposed buyout could be derailed.

Those fears were apparent at the meeting, where shareholders asked Tribune officials questions about how likely the deal was to proceed as planned.

Chief executive Dennis J. FitzSimons said the buyout accord has a "tightly written" clause governing any pullout by the financing group, a clause based on adverse developments in the newspaper industry as a whole, rather than at Tribune.

Because of that, FitzSimons told the audience at yesterday's brief session, "we don't anticipate, nor do our financing sources anticipate, an invocation of that clause."

"We're pleased that Tribune shareholders recognize the value of this transaction and have voted overwhelmingly to approve it," FitzSimons said in a statement Tribune issued after the meeting.

Zell unchanged

In the same statement, Sam Zell emphasized that "despite the recent upheaval in the credit markets, my view of the company as an investment hasn't changed."

Tribune shares, after strengthening Monday, rose 96 cents yesterday to close at $27.98 on the New York Stock Exchange, providing evidence that investors are modestly gaining confidence in the deal's chances for completion.

Tribune has borrowed $7 billion to finance the first step of the transaction and buy back shares; it had to commit to repaying $1.5 billion of that borrowing within two years to secure the loan.

Now that shareholders have cleared the deal, Tribune needs to borrow an additional $4.2 billion to effect the transaction, which gains significant tax advantages because it makes use of an employee stock ownership plan.

James P. Miller writes for the Chicago Tribune.

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