Tribune Co. committee to oversee reorganization

By Michael Oneal
Posted Aug. 31, 2010 at 10:37 a.m.

The board of directors of bankrupt Tribune Co. formed a special committee to oversee the media company’s contentious reorganization process and to manage any legal claims arising from its 2007 leveraged buyout.

Sources said the step is an effort to remove conflicts of interest from the debtor’s decision making process since some Tribune Co. board members and officers may be the target of buyout-related claims.

In a court filing, the company said four directors will sit on the committee, all of whom joined the board when the 2007 transaction closed or after. They are: Mark Shapiro, former chief executive of Six Flags Inc.;  Maggie Wilderotter, chief executive of Frontier Communications Corp.;  Jeffrey Berg, chairman of International Creative Management Inc.;  and Frank Wood, chief executive of Secret Communications and formerly chief executive of Jacor Communications, once owned by Tribune Co. Chairman Sam Zell.<

The filing said that the decision to form a special committee came in the wake of an independent examiner’s report in the case, filed in late July, that scrutinized claimed related to the $8.2 billion buyout Zell led in 2007.

The report concluded that a court might find that the buyout was improper in several respects and that it might spur legal claims against the lenders to the deal, the board, selling shareholders and Tribune Co. officers.

Tribune Co. and several of its key senior and junior creditors had struck a settlement of those potential claims that had formed the basis of the company’s plan of reorganization, filed earlier this year.

But in the wake of the examiners’ report, Tuesday’s filing said, that settlement collapsed and Tribune Co. decided it was appropriate to form a special committee of independent directors to “oversee the  Plan process.”

The filing did not say so specifically, but other sources said the formation of the committee addresses the possible conflicts of interest faced by the wider board. In the filing Tuesday, the special committee sought to retain law firm Jones Day as counsel.

On Aug. 20, Tribune Co. said that it would file amendments to its reorganization plan to reflect continued negotiations toward a settlement. But last Friday, the date it said it would file the changes, the company instead said it would delay any filing pending the outcome of continued talks.


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