Tribune files reorganization plan based on transaction settlement

By Caroline Salls

Pittsburgh, April 12 - Tribune Co. filed a plan of reorganization and related disclosure statement Monday based on a settlement reached last week that would resolve all potential claims arising from the company's 2007 going-private transactions and is supported by major creditors J.P. Morgan and Angelo Gordon, Tribune's pre-bankruptcy senior credit facility and senior noteholder Centerbridge Partners.

According to a company news release, the proposed plan would keep the company intact, sharply reduce its debt and provide it with sufficient liquidity to expand its business in the future.

The company expects to emerge from bankruptcy later this year.

"Tribune's leadership team and employees have done an outstanding job of stabilizing and refocusing the company's business," chairman Sam Zell said in the release.

"Today's filing represents a significant and positive step forward for the business."

Under the plan, senior noteholders would be paid in a combination of cash, debt and stock, and the company's senior credit facility lenders would receive cash and debt, as well as stock representing in excess of 91% of the equity of the reorganized company.

Creditor treatment

Specific creditor treatment will include:

• Holders of allowed loan claims will receive a share of 8.8% of a new senior secured term loan, minus the amount of the term loan to be distributed to senior noteholders, the portion of an other parent claims allocation that is the new term loan and the amount of cash to be distributed to holders of convenience class claims.

These creditors will also receive 8.8% of new common stock, minus the stock distribution to noteholders and holders of other parent claims;

• Holders of senior noteholder claims will receive a share of 7.4% of the new term loan, 7.4% of distributable cash and 7.4% of the new common stock;

• Holders of other parent claims will recover 35.18% in distributable cash;

• Holders of loan guaranty claims will receive 91.2% of the new term loan, plus the other parent claims portion of the term loan, as well as 91.2% of distributable cash, minus the amount of cash to be distributed to holders of general unsecured claims and to other parent claims in excess of the portion of other parent claims that is distributable cash. These creditors will also receive 91.2% of the new common stock, plus the portion of the other parent claims allocation that is distributable cash;

• Holders of general unsecured claims against relevant filed subsidiary debtors will be paid in full with distributable cash, provided, however, that if the company decides that the total sum of these claims will exceed $150 million and a senior lender settlement committee does not elect to provide additional consideration, these general unsecured creditors will receive a share of $150 million in cash;

• Holders of EGI-TRB LLC notes claims, Phones notes claims, securities litigation claims and Tribune interests will receive no distribution; and

• Interests in the filed subsidiary debtors will be reinstated.

In addition, Tribune said it expects to continue its recently implemented employee retirement plan, featuring a 401(k) with a company match and a discretionary profit-sharing allocation.

Under the plan, the company's employee stock ownership plan would terminate and the shares held by the ESOP and in employee accounts would be extinguished.

The disclosure statement hearing is scheduled for May 20.

Tribune, a Chicago-based media company, filed for bankruptcy on Dec. 8, 2008 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 08-13141.

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