Tribune reaches a deal with 2 large cred­i­tors

Los Angeles Times - - Daily Market Roundup - Michael Oneal

Af­ter a two-day, cour­tap­pointed me­di­a­tion in its bank­ruptcy case, Tribune Co. and two of its biggest cred­i­tors reached a pro­posed set­tle­ment Tues­day over how to re­or­ga­nize the Chicago-based me­dia com­pany.

But the pact, struck with hedge funds An­gelo, Gor­don & Co. and Oak­tree Cap­i­tal Man­age­ment, failed to win the sup­port of a num­ber of other key con­stituents in the case, mean­ing the me­di­a­tion process has yet to forge a so­lu­tion to a nearly 2year-old Bank­ruptcy Court bat­tle.

U.S. Bank­ruptcy Judge Kevin Gross, the court-ap­pointed me­di­a­tor, ac­knowl­edged in a court fil­ing Tues­day that the me­di­a­tion was in­com­plete but said he did not con­sider it closed.

Tribune Chief Re­struc­tur­ing Of­fi­cer Don Lieben­tritt also sounded a note of op­ti­mism. “We re­main con­fi­dent that ad­di­tional set­tle­ments will be reached.”

Sig­nif­i­cant dis­agree­ments re­main, how­ever, be­tween the new Tribune al­liance and a va­ri­ety of hold­outs, in­clud­ing se­nior lender JPMor­gan Chase, the Of­fi­cial Com­mit­tee of Un­se­cured Cred­i­tors and ju­nior note holder Aure­lius Cap­i­tal Man­age­ment.

At­tor­ney Howard Kaplan, who rep­re­sents 14 se­nior cred­i­tors hold­ing $730 mil­lion worth of bank debt, called the new plan un­fair, as did the cred­i­tors com­mit­tee.

The new plan is de­signed to al­low Tribune op­er­at­ing busi­nesses, in­clud­ing the Los An­ge­les Times, KTLATV Chan­nel 5 and the Chicago Tribune, to exit bank­ruptcy in rel­a­tively short or­der with­out first hav­ing to re­solve le­gal claims gen­er­ated by the com­pany’s ill-fated 2007 lever­aged buy­out.

Those claims would be put into what’s known as a lit­i­ga­tion trust to be fought over in court by ju­nior cred­i­tors while the com­pany emerges free and clear, owned by the banks and hedge funds that con­trol its se­nior debt — in­clud­ing Oak­tree, An­gelo Gor­don and JPMor­gan.

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