CHICAGO - Baltimore Sun parent Tribune Co. is working with bankruptcy advisers at the investment bank Lazard and the law firm Sidley Austin to weigh financial options, including a possible restructuring for the heavily leveraged media company, sources said yesterday.
Tribune Co. has been struggling under a $13 billion debt load since real estate magnate Sam Zell took the company private last December in an $8.2 billion leveraged buyout. The company, which also owns the Chicago Tribune, Los Angeles Times and the Chicago Cubs faces a deadline today on $70 million of unsecured debt it took on before Zell's deal. Sources said Tribune Co. has cash and could draw on an existing line of credit with its senior lenders to pay today's bill. But the sources said the company was undecided as to whether that made sense or if the company would be better off negotiating with senior lenders to restructure its debt.
Tribune Co. has not been immune to industry declines in advertising revenue, and its cash flow has eroded since the deal. Tribune has cut costs this year by reducing the staff and size of its newspapers.
Analysts have said the sale of the Chicago Cubs by the end of this year is critical to keeping Tribune Co. within its existing debt covenants, which prohibit borrowing more than nine times its earnings before interest, depreciation and amortization.
But even a potential windfall of a Cubs sale might provide only temporary relief if the economic crisis continues to drag down Tribune Co. and its advertisers. That is why Tribune and the banks that made its loans - Citibank, Bank of America, JP Morgan Chase and Merrill Lynch - are considering restructuring options.
A local investment group led by Theodore G. Venetoulis, a publisher and former Baltimore County executive, has expressed interest in buying The Baltimore Sun. When reached last night, Venetoulis said: "Until there is something official, we have no comment other than to say that we continue to be interested in bringing The Sun under local ownership."