Tribune Co.'s top executives want to stay on after emerging from bankruptcy

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: Tribune Co.'s top executives want to stay on after emerging from bankruptcy : Randy Michaels, chief operating officer, tells staff in e-mail that management team is 'committed' and liquidation talk is 'absurd' : By Michael Oneal : Tribune reporter : August 21, 2009 : Regardless of whether Tribune Co. Chairman Sam Zell stays or goes, Chief Operating Officer Randy Michaels signaled Thursday that his team wants to continue to lead Tribune's operations when it emerges from bankruptcy court. : Responding to media speculation in Chicago and New York that Zell eventually would leave Tribune Co. when creditors holding $8.6 billion in debt take control, Michaels said in an e-mail to employees that "while the ownership structure of the company is likely to change, current operating management is committed, and intends to remain in place during and after the restructuring." : Michaels termed "absurd" suggestions in media reports that the company might be liquidated by lenders looking to trim their losses. "We believe there is tremendous value in our current asset mix" and that "the whole of Tribune is greater than its sum of parts," he said. : He added that "in many respects, we're finding that our creditor groups agree with these principles, but of course, there are a lot of details to be worked out." : Several sources close to both the company and the creditors said it remains too early to say how the new ownership structure will shape up and who will remain among Tribune Co. management or the company's board. All of that will be the subject of future negotiations, but by virtue of their enormous claims the creditors ultimately will decide. Tribune Co. has until Nov. 30 to hammer out a plan, but that deadline could be extended. : Still, one source said Zell's situation is significantly different from that of his management team, even though he handpicked many of them, including Michaels. : Zell gained control of Tribune Co., which owns the Chicago Tribune, Los Angeles Times and many other media properties, by virtue of a heavily leveraged transaction to take the company private for $8.2 billion in late 2007. That deal saddled Tribune Co. with $13 billion in debt just as the bottom fell out of the advertising market, and within a year Zell, also chief executive, put the company in Chapter 11 protection. : As the Chicago Tribune reported June 8, the reorganization plan taking shape among Tribune Co. and its many creditors likely would transfer control of the troubled media conglomerate from Zell to a group of large banks and investors that holds $8.6 billion in senior debt. : The plan centers on a debt-for-equity swap that probably would give the senior lenders a large majority ownership stake in the reorganized company. The new Tribune Co. stock very likely could trade publicly, providing liquidity to lenders and other creditors who receive stock in the deal. : One key result of the plan would be to wipe out a $90 million warrant Zell negotiated as part of the going-private transaction, sources said. The warrant gives Zell the right to buy about 40 percent of the company for $500 million and is the basis of his control of the company. : Zell also holds a $250 million note representing a loan he made to Tribune Co. as part of the transaction. That note, however, is near the bottom of the hierarchy of claims in Tribune Co.'s Chapter 11 bankruptcy case, and sources say it is unlikely it would retain any value during the capital reorganization. : While Zell has not commented and some sources say he and the creditor group have yet to decide his future with the company, many outside observers have said it seems unlikely he would want to remain as CEO without a major ownership stake, something the lenders may not be willing to grant. : In his e-mail, Michaels said plainly for the first time that "current operating management" wants to stay after the company emerges. There was no mention of Zell. : A Tribune spokesman said Michaels would not elaborate on his e-mail. Zell was out of the country and unavailable for comment. : The key question is whether the creditors want Michaels to stay. : "It would not be abnormal for management to put forth its own view of how things should go," said one source close to the situation.

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