Judge calls for Tribune to provide creditors with more information in reorganization outline

Tribune creditors to get more reorg plan details

WILMINGTON, Del. — The Tribune Co. must provide more information to creditors in the disclosure statement outlining its proposed reorganization plan, a Delaware bankruptcy judge said Thursday.

At the direction of Judge Kevin Carey, attorneys for Tribune agreed to revise the disclosure statement by next week to include information sought by various creditor groups.

Some of the information relates to the 2007 leveraged buyout that took the media conglomerate private but left it saddled with debt. Tribune agreed to provide details on its actual and projected cash flows at the time, and the sources and use of funds that financed the buyout.

Tribune also agreed to provide more information about its proposed bankruptcy exit financing, and the range of potential recoveries for unsecured bridge loan lenders who provided $1.6 billion in financing in 2007.

Tribune also said it would incorporate brief statements outlining the positions of supporters and opponents in a revised disclosure statement to be submitted in advance of another hearing the judge scheduled for May 28.

In addition to the bridge lenders, attorneys for a group of junior bondholders and for a group of credit lenders who claim they are owed more than $3.6 billion under a 2007 secured credit agreement have indicated that they will challenge Tribune’s proposed reorganization plan, which is based on the settlement of potential legal claims stemming from the 2007 buyout.

The junior bondholders have alleged in a lawsuit that JPMorgan, Bank of America and other banks that financed the buyout engaged in fraudulent conduct because they knew the debt load would leave Tribune insolvent. Those creditors hold $1.2 billion in Tribune bonds but stand to recover nothing under the proposed reorganization plan.

Under Tribune’s plan, JPMorgan and distressed-debt specialist Angelo, Gordon & Co. would be among the new owners of the company’s media properties, which include Los Angeles Times, the Chicago Tribune, other daily newspapers and broadcast stations.

Centerbridge Partners, which leads a group that owns outstanding senior bond debt, would get a 7.4 percent stake in Tribune. In return, Centerbridge would release any claims it might have related to the 2007 buyout engineered by real estate mogul Sam Zell.

At the urging of the trustee, Tribune also said it would follow through on a previous promise to include information in the disclosure statement about two proposed management bonus plans that could total more than $20 million.

Joseph McMahon Jr., an attorney representing the U.S. trustee, unsuccessfully argued that Tribune’s disclosure statement also should include more information about the potential tax liability it faces from its sale of the Chicago Cubs baseball team and Wrigley Field. McMahon said Tribune could be presented with a $300 million tax liability, depending on how the Internal Revenue Service views the transaction.