Tribune files Chapter 11 bankruptcy in light of 'perfect storm' of revenue decline, credit crisis

By Caroline Salls

Pittsburgh, Dec. 8 - Tribune Co. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware.

The company said it has enough cash to continue to operate its media businesses during the restructuring, including publishing its newspapers and running its television stations and interactive properties without interruption.

"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," chairman and chief executive officer Sam Zell said in a company news release.

"Unfortunately, at the same time, factors beyond our control have created a perfect storm - a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt.

"We believe that this restructuring will bring the level of our debt in line with current economic realities, and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve.

"This restructuring focuses on our debt, not on our operations."

The Chicago Cubs franchise, including Wrigley Field, was not included in the Chapter 11 filing, but the company said efforts to monetize the Cubs and its related assets will continue.

Although the company has enough cash to continue operations, Tribune said it has negotiated an agreement with Barclays to maintain its existing securitization facility in case the company's operating results see even more significant declines.

Barclays has also agreed to provide a letter-of-credit facility, the release said.

Tribune also requested court approval of various customary first-day motions, including: maintaining employee payroll and health benefits; the fulfillment of pre-filing obligations; the continuation of the company's cash management system; and the ability to honor all customer programs.

Debt details

According to court documents, Tribune had $7.604 billion in assets and $12.972 billion in debt at Dec. 8.

The company's largest unsecured creditors include:

• Agent JPMorgan Chase Bank NA, Houston, with an $8.571 billion senior facility claim;

• Agent Merrill Lynch Capital Corp., Irving, Texas, with a $1.6 billion bridge loan claim;

• Notes trustee Deutsche Bank National Trust, Summit, N.J., with a $900 million exchangeable subordinated debentures claim, a $450 million 4 7/8% unsecured notes claim, a $330 million 5¼% unsecured notes claim, a $148 million 7¼% debentures claim, a $98.75 million 7½% debentures claim, an $84.96 million 6.61% debentures claim, an $82.08 million 7¼% debentures claim and a $69.55 million series E medium-term notes claim;

• Warner Brothers Television, Burbank, Calif., with a $23.69 million trade debt claim;

• Mark Willes, Provo, Utah, with an $11.23 million retirement and deferred comp claim;

• Twentieth Television, Inc., Los Angeles, with an $8.05 million trade debt claim;

• Buena Vista Entertainment Inc., Burbank, Calif., with a $6.22 million trade debt claim;

• SP Newsprint Co., Greenwich, Conn., with a $5.15 million trade debt claim;

• NBC Universal Domestic Television Distribution, New York, with a $4.94 million trade debt claim; and

• Robert Erburu, Los Angeles, with a $4.35 million retirement and deferred comp claim.

The company said in the release that it has repaid roughly $1 billion of its senior credit facility since going private last year.

Tribune is a Chicago-based media company. Its Chapter 11 case number is 08-13141.

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