Tribune Co. preparing to print in red ink, according to WSJ

SockPuppet · Dec 9, 2008

Paging Alan Shore, please contact Tribune employees about their pending class-action suit ...

I would love to see a bankruptcy judge take a look at the Tribune deal, take a look at Zell's consideriable assets and tell him, "You bought it, pal. Write the fucking check."

goalmouth · Dec 9, 2008

Zell's deal was a leveraged buyout. The employees will write the fucking check.

Lugnuts · Dec 9, 2008

I keep reading that the employees own the damn thing, but they had no say in that, and they have no say in how it's run.

Like the mortgage mess, you have to wonder how this shit is legal.

VJ · Dec 9, 2008

Lugnuts said:

I keep reading that the employees own the damn thing, but they had no say in that, and they have no say in how it's run.

Like the mortgage mess, you have to wonder how this shit is legal.
Click to expand...

Here's how, from this NYT article: http://www.nytimes.com/2008/12/09/business/media/09sorkin.html?ref=todayspaper

Mr. Zell isn’t the only one responsible for this debacle. With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company before hand and helped orchestrate this ill-fated deal — and made a lot of money in the process. They include members of the Tribune board, the company’s management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.

It was Tribune’s board that sold the company to Mr. Zell — and allowed him to use the employee’s pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the company’s chief executive, backed the plan. He was paid about $17.7 million in severance and other payments. The sale also bought all the shares he owned — $23.8 million worth. The day he left, he said in a note to employees that “completing this ‘going private’ transaction is a great outcome for our shareholders, employees and customers.”

Well, at least for some of them.

Tribune’s board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a “fairness opinion” blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).

On top of that, a firm called the Valuation Research Corporation wrote a “solvency opinion” suggesting that Tribune could meet its debt covenants. Thomson Reuters, which tracks fees, estimates V.R.C. was paid $1 million for that opinion. V.R.C. was so enamored with its role that it put out a press release.
Click to expand...

In conclusion, everyone involved in approving the sale got rich.

Simon_Cowbell · Dec 9, 2008

VJ said:

Lugnuts said:

I keep reading that the employees own the damn thing, but they had no say in that, and they have no say in how it's run.

Like the mortgage mess, you have to wonder how this shit is legal.
Click to expand...

Here's how, from this NYT article: http://www.nytimes.com/2008/12/09/business/media/09sorkin.html?ref=todayspaper

Mr. Zell isn’t the only one responsible for this debacle. With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company before hand and helped orchestrate this ill-fated deal — and made a lot of money in the process. They include members of the Tribune board, the company’s management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.

It was Tribune’s board that sold the company to Mr. Zell — and allowed him to use the employee’s pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the company’s chief executive, backed the plan. He was paid about $17.7 million in severance and other payments. The sale also bought all the shares he owned — $23.8 million worth. The day he left, he said in a note to employees that “completing this ‘going private’ transaction is a great outcome for our shareholders, employees and customers.”

Well, at least for some of them.

Tribune’s board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a “fairness opinion” blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).

On top of that, a firm called the Valuation Research Corporation wrote a “solvency opinion” suggesting that Tribune could meet its debt covenants. Thomson Reuters, which tracks fees, estimates V.R.C. was paid $1 million for that opinion. V.R.C. was so enamored with its role that it put out a press release.
Click to expand...

In conclusion, everyone involved in approving the sale got rich.
Click to expand...

Doesn't really answer HOW that shit is legal.

I thought employees getting fucked re: their pensions, etc. was taken care of after Enron.

Is FitzSimons legally liable?

Double Down · Dec 9, 2008

As much as I hate Sam Zell, I loathe Dennis FitzSimmons 1,000 times more. He was the most crooked, soulless douchebag I've ever had the displeasure to work for. He got a whole shitload of money for fiddling while Rome burned. Zell has been a fool and a snake, but at least he had some interest in saving the company if only for financial reasons. FitzSimmons just wanted to stuff his pockets with as much gold as possible before sneaking out the back door. He would do shit like send out a note telling us about how he had been diagnosed with prostate cancer and was having surgery and thank people for their kind wishes, while at the same time forcing us to find out about various cuts of our own company through other newspapers.

Joe Williams · Dec 9, 2008

Zell's deal paid the employees $34 a share for their stock. So did that allow them to sell the stock soon thereafter and reap the profit? Was there a better time to get out of Tribune Co., a good time and (now?) a bad time?

Appreciate any insights into how the employees will be left holding the bag now.

Rockbottom · Dec 9, 2008

NYT borrows against their own building: http://www.iht.com/articles/2008/12/08/business/08times.php

rb

Joe Williams · Dec 9, 2008

Rockbottom said:

NYT borrows against their own building: http://www.iht.com/articles/2008/12/08/business/08times.php

rb
Click to expand...

Next stop: The pawn shop. Maybe they can get a few bucks for Red Smith's old typewriter.

TheSportsPredictor · Dec 15, 2014

Birdscribe · Dec 9, 2008

Simon_Cowbell said:

VJ said:

Lugnuts said:

I keep reading that the employees own the damn thing, but they had no say in that, and they have no say in how it's run.

Like the mortgage mess, you have to wonder how this shit is legal.
Click to expand...

Here's how, from this NYT article: http://www.nytimes.com/2008/12/09/business/media/09sorkin.html?ref=todayspaper

Mr. Zell isnt the only one responsible for this debacle. With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company before hand and helped orchestrate this ill-fated deal and made a lot of money in the process. They include members of the Tribune board, the companys management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.

It was Tribunes board that sold the company to Mr. Zell and allowed him to use the employees pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the companys chief executive, backed the plan. He was paid about $17.7 million in severance and other payments. The sale also bought all the shares he owned $23.8 million worth. The day he left, he said in a note to employees that completing this going private transaction is a great outcome for our shareholders, employees and customers.

Well, at least for some of them.

Tribunes board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a fairness opinion blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).

On top of that, a firm called the Valuation Research Corporation wrote a solvency opinion suggesting that Tribune could meet its debt covenants. Thomson Reuters, which tracks fees, estimates V.R.C. was paid $1 million for that opinion. V.R.C. was so enamored with its role that it put out a press release.
Click to expand...

In conclusion, everyone involved in approving the sale got rich.
Click to expand...

Doesn't really answer HOW that shit is legal.

I thought employees getting fucked re: their pensions, etc. was taken care of after Enron.
Click to expand...

Way before that, Simon. Try the 70s, when the Mob was using the Teamster pension fund -- the Central States Pension Fund -- to finance the purchase of Vegas casinos en masse.

They siphoned nearly a quarter-billion out of that fund (and two others), buying 11 of 14 casinos and skimming millions before the Fed's moved in.

WriteThinking · Dec 9, 2008

goalmouth said:

Zell's deal was a leveraged buyout. The employees will write the fucking check.
Click to expand...

Yeah, with their severance pay and pensions, apparently.

Freelancers are out of luck, too, according to this LA Observed item.

http://www.laobserved.com/archive/2008/12/payments_to_lat_freelance.php

And, take a look at that comment by Zell to reporters that's mentioned at the end.

What an arrogant ass of an SOB. Makes you wonder if he's almost enjoying all this angst and attention from others that he and his properties are getting right now.

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Tribune Co. preparing to print in red ink, according to WSJ

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