Monday, April 7, 2008


Last year when Zell bought Tribune he said he didn't buy the company "to figure out what to get rid of." But things have gone from bad to worse in our industry since the completed Zell Deal tied up your retirement funds without asking you.

The company struggles under $12.8 billion in debt, faces risk of credit default and according to today's NYT story, analysts say Zell needs to get rid of "both the Cubs and another major asset like Newsday, and relatively soon, to remain solvent."

Last year, the company had earnings (before interest, tax, depreciation and amortization) of about $1.2 billion. But 2008 is expected to be more difficult, and the company’s bond covenants require it to have earnings around $1.1 billion or risk being declared in default — even if it has the cash to make its interest payments.

Tribune’s credit rating has slipped several notches below investment grade, and its bonds are trading far below their face value, signaling that the market sees a high risk of default. The company’s long-term, unsecured debt can be bought for less than 50 cents on the dollar.
The company has scheduled a conference call with bankers on April 17 to discuss Tribune's finances. You should be on that call, too. It's your company, your money and your retirement fund at risk.

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