Tribune expected to begin polling creditors

Posted June 7, 2010 at 11:13 a.m.

Reuters | Tribune Co modified the description of its reorganization plan on Friday
to add language requested by a bankruptcy judge, likely clearing the
way for the media company to put the proposal to a vote by creditors.

The owner of the Los Angeles Times, Chicago Tribune and New York
television station WPIX was directed by Delaware Bankruptcy Judge Kevin
Carey on Friday to change the description of how it treats holders of
bridge loans.

Judges often approve disclosure statements once a company incorporates requested changes.

The disclosure statement must be approved before Tribune can ask creditors to vote on its reorganization plan.

Tribune went through a more protracted process than most to get approval for its disclosure statement as it struggled to win over the bridge loan lenders.

Under the proposed plan, the bridge loan lenders would receive a recovery between zero and 4.6 percent of their $1.6 billion in claims, and they felt the disclosure did not accurately describe their treatment.

Tribune plans to turn the company over to senior lenders led by JPMorgan Chase & Co.

Those lenders funded the take over of the company by real estate developer Sam Zell in 2007 in a $8.2 billion leveraged buyout. Tribune filed for bankruptcy about a year later.

The company also plans to set aside about 7 percent of its post-bankruptcy equity for bondholders led by Centerbridge Capital Advisors to satisfy their legal claims against the management and leveraged buyout lenders.

An examiner is expected to report by July 12 on potential legal claims stemming from the leveraged buyout, which could change the case if it is determined valuable claims could be brought against the lenders, management and others.

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