Shareholders Say Tribune Can Go Private

Media company Tribune Co. is ready to go private. Shareholders voting by proxy wholly backed the privatization move. At last count, the votes in hand were 97 percent for and 2 percent against, with 1 percent abstaining. The buyout has real estate mogul Sam Zell as the main investor.

The deal is still not out of the woods yet. There exists a lot of uncertainty because of the large scale borrowing the company has had to undertake to complete the deal. In the current financial situation, with investors wary of issues like credit risk, financing a deal by borrowing $8 billion does not seem the way to go for many.

In fact, this uncertainty is still prevalent, despite the shareholders proxy vote of confidence. The company has already had to make certain adjustments to ensure the first phase of the deal was through. Apart from that, it has to take on another $4.2 billion in loans to actually go through with the entire process.

That there are still lingering questions about the deal is apparent from the huge chasm that exists between the deal value and the price at which Tribune shares are being valued in the market.

While the difference has closed down a bit in the past few days, Tribune share prices are still at least 20 percent adrift of the price at which the deal is being valued. While the deal is being prices at $34 per share, the market price of the shares is only $27.84, which is after a 3 percent upsurge during trading in the morning.

In all this, the lead investor, Sam Zell, has been optimistic about the deal itself. His views on the buyout remain the same, though he was not present during the vote meeting in Chicago.

Coming to the deal itself, the buyout involves an employee stock ownership plant that will ensure workers at the Tribune are the majority owners. This is one area where the unions and related employee representatives are at loggerheads with the Tribune officials. They want more control with regard to this plan.

As part of the deal, Tribune will sell off one of its assets, the Chicago Cubs baseball team. There are, however, no plans to sell the company’s newspapers.