It was already a fait accompli that Tribune’s sale to hedge fund Alden Global Capital was going to lead to a lot of cost-cutting, given Alden’s reputation for buying, and then gutting, local newspapers. But now we know just how much Tribune is going to be screwed over.
In an SEC filing on Monday, Alden disclosed that it borrowed $278 million to complete the $630 million purchase, all of which is now on Tribune’s balance sheet, saddling the struggling publisher with a mound of debt. Alden borrowed $218 million from private equity firm Cerberus and $60 million from MNG Enterprises, a digital media company owned by Alden.
The loan from MNG carries a 13% interest rate, which means that Tribune is on the hook to essentially pay Alden for its own purchase.
In February, Tribune agreed to be acquired Alden Global Capital in a $630 million deal, pending shareholder approval. Under the agreement, Alden, which already owns about 32% of Tribune’s shares, will acquire the remaining shares it doesn’t already own for $17.25 per share.
Tribune publishes the Chicago Tribune, New York Daily News, Baltimore Sun, Orlando Sentinel, Sun-Sentinel, and Daily Press, among others.