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ShareCHICAGO - Less than 18 hours before a scheduled Tribune Co. board meeting at which directors had been expected to approve Chicago billionaire Sam Zell’s restructuring proposal, Los Angeles billionaires Eli Broad and Ron Burkle on Thursday evening sent directors a letter with a revised version of their previously dismissed bid, a source familiar with the letter said.
The source said Broad and Burkle’s new proposal is worth $34 per share, includes a recapitalization funded, like Zell’s plan, by an employee stock ownership plan, or ESOP, and would involve the two men investing $500 million in capital. It was not immediately clear what effect this revision would have on the company’s plans or timetable.
Tribune Co., owner of the Chicago Tribune, Los Angeles Times and other media properties as well as the Chicago Cubs baseball team, is facing a self-imposed Saturday deadline to announce a decision. The process to unlock the company’s value, begun in September, originally was to have been completed by the end of last year but was extended through the first quarter of 2007.
Submitted after the company’s Jan. 17 deadline for final bids, Zell’s plan to take the conglomerate private, using a tax-beneficial employee stock ownership plan and a contribution of around $300 million in capital, was said to regain traction with the independent directors studying strategies, who earlier seemed to favor a so-called “self-help” strategy from Tribune Co. management.
Zell’s offer reportedly is worth $33 per share. But, like other proposals, it requires considerable leveraging for the company, which already has $5 billion in debt.
Zell wouldn’t comment late Thursday.
Burkle and Broad’s original offer, which they described as a “public leveraged buyout,” was one of three the company fielded by its mid-January deadline.
The two men, who earlier had approached Tribune Co. individually expressing interest in buying the Los Angeles Times, believed their proposal to be worth $34 per share at that time, as well. Sources said the plan was to add $9.8 billion in new debt to the balance sheet and refinance a portion of Tribune’s existing debt to pay a dividend of $27 per share.
Broad, a developer-turned-philanthropist, and Burkle, who made his fortune in supermarkets, would invest $500 million for approximately 34 percent of the restructured Tribune Co., which they believed would be valued at $7 per share initially after the dividend, but which they projected would reach $12 in less than four years.
Another bid for the company, worth $31.70 per share, came from California’s Chandler family, Tribune’s largest shareholder with a 20 percent stake. The family, heir to the Los Angeles-based Times Mirror empire Tribune acquired in 2000, agitated to put the company in play with a claim last year Tribune stock was worth more than $45 a share. The third bid was from Carlyle Group, a large private-equity group based in Washington, D.C. It offered $4 billion for the company’s television assets.
A Tribune Co. spokesman wouldn’t comment.
