The credit analysis firm Fitch Ratings said Monday that the bank lenders that provided the bulk of the financing might recover as little as 31% of the investments.
For other debt holders, Fitch said, “0% recovery is realistic.”
The bond market had anticipated Tribune’s looming distress. As recently as two weeks ago, some Tribune bonds were trading as low as 14 cents on the dollar.
The NYT points out that ex-employees are getting the shaft, too:
A note on an internal Tribune Company Web site said, “All ongoing severance payments, deferred compensation and other payments to former employees have been discontinued and will be the subject of later proceedings before the court.” That made it apparent that employees who recently were laid off or took buyouts would join the long list of unsecured creditors.
The Journal says Zell will be wiped out:
Last year, Mr. Zell’s firm invested $315 million in Tribune in exchange for a subordinated note and a warrant entitling it to acquire 40% of the stock. He now says he assumes his investment is worthless.
The Chicago Tribune’s story is a good roundup that hits most of the issues, and this is useful:
Douglas Baird, a bankruptcy specialist at the University of Chicago Law School, agreed that Tribune Co.’s Chapter 11 filing is much less complicated than other big ones such as United Airlines. Since the company’s papers and TV stations generate cash flow on their own, the bankruptcy court will focus on restructuring the balance sheet, not operations, he said.
But Baird and others also said that the bankruptcy process tends to accelerate any sort of operational restructuring that is under way.