After more than three years, U.S. Bankruptcy Judge Kevin Carey confirmed a plan Monday to transfer ownership of Tribune Co. to a group of creditors led by the Los Angeles-based hedge fund Oaktree Capital Management.
The judge's order was expected — he approved a plan to restructure the Chicago-based media giant earlier this month — and will spur financial moves that may allow Tribune to emerge from its Chapter 11 bankruptcy as early as this year.
The decision clears the way for the Federal Communications Commission to consider the company's application to transfer its television and radio broadcast licenses to the new owners, which in addition to Oaktree includes Angelo, Gordon & Co. and JPMorgan Chase.
Tribune owns the Los Angeles Times, the Chicago Tribune, KTLA-TV, WGN television and radio, Zap2It.com, and an array of other media properties and real estate.
Though the restructuring is expected to help the $7 billion company — which is $13 billion in debt — access $1.1 billion in new debt financing and a $300 million line of credit, junior creditors in the deal plan to appeal Carey's decision.
Aurelius Capital Management said it plans to lead a group of junior creditors in efforts to contest the decision before a federal court in New York. Already, junior creditors are suing 35,000 former Tribune shareholders who cashed out in the company's 2007 leveraged buyout designed by real estate mogul Sam Zell (pictured above).
The company filed for new waivers two years ago allowing them to continue to own print and broadcast properties in the same market, but the FCC's 180-day window to decide was cut short at 74 days because Tribune appeared to be in bankruptcy free-fall.
The FCC process could take at least to six months and, if the application is denied, the bankruptcy deal is moot."