Tribune hires bankruptcy advisers

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: Tribune Co. hires bankruptcy advisers : Debt-laden media company exploring restructuring options : By Phil Rosenthal and Michael Oneal | Tribune reporters : December 8, 2008 : Chicago Tribune parent Tribune Co. is working with bankruptcy advisers at investment bank Lazard and law firm Sidley Austin to weigh financial options, including a possible restructuring for the heavily leveraged media company, sources said Sunday. : "It's an uncertain and difficult environment," Tribune Co. spokesman Gary Weitman said Sunday night. "We haven't made any decision. We're looking at all of our options." : Tribune Co. has been struggling under a $13 billion debt load since real estate magnate Sam Zell took the company private last December in an $8.2 billion leveraged buyout. The company faces a Monday deadline on $70 million of unsecured debt it took on before Zell's deal. : Sources said Tribune Co. has cash and could draw on an existing line of credit with its senior lenders to pay Monday's bill. But the sources said the company was undecided late Sunday as to whether that made sense or if the company would be better off negotiating with senior lenders to restructure its debt. : Tribune Co. has not been immune to industry-wide declines in advertising revenue, and its cash flow has eroded since the deal was done. : Analysts have said the sale of the Chicago Cubs baseball team by the end of this year is critical to keeping Tribune Co. within its existing debt covenants, which prohibit borrowing more than nine times its earnings before interest, depreciation and amortization. : But even a potential windfall of a Cubs sale might provide only temporary relief if the Tribune Co. and its advertisers continue to be dragged down by the current economic crisis, which has compounded the effects of splintering audiences for media companies. : That is why Tribune Co. and the banks that made its loans—Citibank, Bank of America, JP Morgan Chase and Merrill Lynch—are discussing possible restructuring options. : Tribune Co.'s debt trades on the open market for a fraction of its original value, and analysts suspect those banks have already written off their exposure. So the lenders may be willing to negotiate a lower level of debt. But these discussions are always tricky, which is why Tribune Co. has sought bankruptcy counsel, sources said. : The company hired Lazard in recent weeks. It has had a long-standing relationship with Sidley Austin. : Sources indicated some within Tribune Co. management believe that restructuring while there is still cash in the bank and while its newspapers are all still cash-flow positive give the company its best shot at weathering the current financial storm. : Tribune Co. already this year has cut costs through moves such as reducing the staff and size of its newspapers, including the Chicago Tribune and Los Angeles Times. It also has unloaded assets, including selling control of its Long Island, N.Y., daily newspaper Newsday to Cablevision's Dolan family and part of its stake in the CareerBuilder.com employment site to fellow partner Gannett Co.

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