Tribune, bondholders reach agreement on access to buyout records
By APThursday, September 24, 2009
Tribune, bondholders agree on records access
WILMINGTON, Del. — Attorneys representing Tribune Co. in its bankruptcy case have reached an agreement with bondholders over access to records of the 2007 buyout that took the company private.
According to a proposed court order submitted Thursday, Tribune and banks that financed the buyout have agreed to provide the bondholders with documents provided to a committee of creditors, subject to a confidentiality agreement finalized Wednesday. Attorneys for the bondholders also can take part in any depositions taken by the creditors committee.
The bondholders, who had purchased their debt before real estate mogul Sam Zell led Tribune’s $8.2 billion buyout, claim the deal was fraudulent and pushed the company into insolvency because the debt mainly went to cash out Tribune stockholders.
Their initial court filing said it was on behalf of creditors who hold 18 percent of Tribune’s bonds, but it did not reveal their names.
Tribune and its creditors committee have said they are willing to share information, but that the bondholders refused to sign confidentiality agreements. They also argue that an investigation by the bondholders was unnecessary because it would duplicate the committee’s work.
With the new agreement, bondholders could gain access to information that could prompt claims against Zell or the banks that provided financing for the deal and now stand to take over the company. These creditors could also ask the bankruptcy court to require that the banks that participated in the buyout get paid after other debt holders.
Either of those options could pressure Tribune to give the bondholders a better deal in a reorganization plan, and it could extend Tribune’s time in Chapter 11.
Tribune, owner of the Chicago Tribune, Los Angeles Times and other newspaper and TV properties, filed for bankruptcy protection in December 2008, with a debt load of $13 billion.