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TRIBUNE TO SELL CUBS; SUN-TIMES MEDIA CASH PERILOUSLY LOW TD Ameritrade founders to pay $845M for club, Wrigley Field, TV.

Chicago was the focus of the newspaper bankruptcy beat last week -- though Philadelphia made a run at catching our eye -- as Tribune Co. finally cut a deal to sell its Chicago Cubs National Baseball League franchise and Sun-Times Media Group Inc. was reported to be down to the tail end of its cash.

Tribune on Friday said that it had signed a definitive agreement with the Rickets family to acquire 95 percent of the Cubs, Wrigley Field and Tribune's roughly 25-percent stake in Comcast SportsNet. The deal is valued at $845 million and Tribune will keep a five-percent, non-controlling stake.

The company had been seeking to sell the baseball team for more than a year, though it earlier attempted to break off Wrigley Field from the deal and try to sell it separately to the city of Chicago. That deal unraveled earlier this year and Tribune began to focus on the Ricketts, who made their fortune with the discount stock brokerage now known as TD Ameritrade.

The deal is dependant upon the approval of the owners of the other Major League Baseball franchises as well as the bankruptcy court; Tribune entered Chapter 11 in December. Tribune said it expected the court to approve the deal in the latter part of this year.

In other Tribune news, the company's chief operating officer said in a Thursday memo to company staff that he doesn't expect the company to be broken up and sold off into pieces. Randy Michaels said in the memo, though, that the "ownership structure of the company is likely to change."

Tribune is owned by real estate mogul Sam Zell and an employee stock ownership plan. Part of the slowness of Tribune's exit from Chapter 11 has been Zell's insistence upon a retention of both those aspects when it gets out of bankruptcy. Michaels' note is the first indication that Tribune is apparently willing to bring creditors on board as equity holders in the reorganized business.

At crosstown rival Sun-Times Media Group Inc., the company's main creditor isn't interested in an equity stake, as that creditor is the U.S. government and the Internal Revenue Service. Sun-Times, formerly known as Hollinger International Inc., was forced into Chapter 11 because of a $500 million debt stemming from the time when Lord Conrad Black ran the company. Black was convicted of fraud and is serving time in a federal penitentiary.

The Chicago Tribune reported on Saturday that Sun-Times used up another $3.8 million of its cash reserves in July and that those reserves now sit at $19.3 million. The paper quoted a restructuring expert as saying that amount is close to making the company "administratively insolvent."

Jeremy Halbreich, chairman and interim chief executive of Sun-Times Media, acknowledged to the Tribune that the paper's cash reserves are getting perilously low but he told the paper he's close to selling the company. Halbreich, the former general manager of the Dallas Morning News, said he is talking to "several" potential buyers, including Jim Tyree of Mesirow Financial Holdings Inc. of Chicago.

In Philadelphia, that city's dailies finally came out with a reorganization plan on Thursday. Philadelphia Newspapers LLC filed for Chapter 11 bankruptcy on Feb. 22, listing loans in excess of $300 million, which mostly stemmed from the papers' takeover by a local group in 2006.

Under Philadelphia Newspapers' plan, creditors would get $66.6 million in cash and real estate -- the papers' historic headquarters building -- and the company would pay $25 million in legal and bankruptcy costs, for a total value of $92 million.

The papers' plan would be the opening bid and if another bidder came forward with a better deal, the bankruptcy court would probably pick that one.

Under this plan, the current equity holders would continue to own the business and the current management team would stay in place.

And hey, don't forget Reader's Digest Association Inc., which also filed for Chapter 11 last week. It was a pre-negotiated deal, so the publisher of the iconic tiny magazine will exit quickly. This is another instance of the equity-holder walking away with nothing and the lenders (J.P. Morgan Chase & Co. in this case) taking over the business.
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Date:Aug 24, 2009
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