Tribune sale clears hurdle
chicago -- Shareholders of Tribune Co., corporate parent of the Los Angeles Times and KTLA-TV Channel 5, on Tuesday overwhelmingly approved the $8.4-billion buyout of the company led by Chicago real estate magnate Sam Zell.
Tribune Chairman and Chief Executive Dennis J. FitzSimons announced that 97% of the shares voted by proxy at Tuesday’s shareholder meeting here were cast in favor of the deal, which is expected to close in the fourth quarter. The “pro” votes represented about 65% of all outstanding shares entitled to vote, Tribune said.
Despite skepticism among stock market traders about whether the deal would be completed, FitzSimons reiterated that financing was “fully committed by four of the world’s largest financial institutions,” and that the company expected to be in “full compliance” with the terms of its loan agreements.
Tribune shares jumped as much as $1 in trading during the meeting, with investors apparently reacting to FitzSimons’ remarks. The shares closed at $27.98, up 96 cents. That’s still 18% below the $34 at which the shares are to be purchased under the buyout plan, but it is a significant recovery from last week, when the price sank to a multiyear closing low of $25.26.
About 100 investors and journalists converged Tuesday morning on a seventh-floor conference room at the company’s headquarters, the iconic Tribune Tower in downtown Chicago.
Zell didn’t attend the 35-minute meeting because of a prior commitment, FitzSimons said. In a press release issued by Tribune later in the day, Zell said, “I believe Tribune is reasserting itself as a national leader in news generation and distribution. Despite the recent upheaval in the credit markets, my view of the company as an investment has not changed.”
During a question-and-answer session at the meeting, FitzSimons was pressed on several aspects of the deal by investors and members of the International Brotherhood of Teamsters, which represents 2,000 Tribune employees at several locations.
Holding up a black-and-white leaflet, FitzSimons complained that Teamster representatives had been handing out literature at several Tribune sites suggesting that employees’ retirement benefits were at risk in the deal, which he called “a blatant misrepresentation of facts.”
FitzSimons said workers’ existing pension benefits were “safe and secure” and that their $1.8 billion in retirement savings was “$300 million over-funded.”
Under the terms of the buyout, Tribune will stop making annual contributions to the employees’ 401(k) retirement plans. Instead, it will contribute to a cash-balance retirement plan for employees and will allocate shares of the successor company to employees’ accounts in a new employee stock ownership plan. It is the stake in the ESOP that is at risk; if the company failed, those shares would be worthless. However, the funds in the existing 401(k) and the cash-balance plan would not be affected by the fortunes of the new company.
George Tedeschi, a Teamster official based in Washington and the father of a pressman at Tribune’s New York Newsday, asked why, with the shares trading well below the buyout price, Tribune didn’t begin buying back stock in the open market rather than paying $34 per share later on.
FitzSimons declined to answer. A Tribune spokesman said later that the board of directors set strategy for stock buybacks and that, as a matter of policy, the company did not comment on potential future purchases.
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thomas.mulligan@latimes.com
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Huffstutter reported from Chicago and Mulligan from New York.
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