Tribune Sale Update

[SOURCE: Associated Press]
Media conglomerate Tribune Co. said Thursday it plans to use $500 million in available cash to reduce the amount it needs to borrow to close the $8.2 billion buyout of the company by year's end.

* Tribune to Reduce Deal Financing

* Tribune uses cash to reduce borrowing,0,860290.story?track=rss

* Tribune trims deal's debt level,0,4172456.story?track=rss
* Obstacles lifted, Tribune Co. sale nears finish line
[SOURCE: Los Angeles Times, AUTHOR: Jim Puzzanghera and Thomas S. Mulligan]
Much of the cash will come from a $350-million tax refund Tribune received in a settlement last June with the Internal Revenue Service over the 1998 sale of a publishing subsidiary. The cash infusion will reduce the total borrowing in the second and final stage of the buyout to $3.7 billion from $4.2 billion. "This gives the company a bit of breathing room and perhaps alleviates a bit of the anxiety" for the bankers, said Edward Atorino, publishing analyst with Benchmark Co. in New York. The deal's closing still is subject to a solvency opinion from an outside appraiser, but people involved in the transaction believe that Tribune will clear that hurdle.,1,3141541.story?coll=la-headlines-pe-business

* How Solvent Is Tribune Co.?
[SOURCE: Wall Street Journal, AUTHOR: Dennis K. Berman]
Deal Journal has covered hundreds of mergers and acquisitions. We can't recall one that was publicly contingent on the receipt of a solvency opinion. Until now: Sam Zell's planned buyout of Tribune Co. Solvency opinions typically are used in highly leveraged financial transactions, to test -- surprise -- a company's continuing solvency. They are designed as a legal protection for board members against the concept of "fraudulent conveyance." This is a term most often used in bankruptcy court, in situations where assets are cash or are disbursed in a way that is deemed unfair to creditors. These opinions are notoriously easy to obtain, and people close to the deal say they expect Tribune to pass the test without problem. Still, the fact that it exists is instructive of the nature of the deal. When the original solvency opinion was granted on May 9, company advisers Valuation Research Corp. estimated Tribune's fiscal 2008 earnings before interest, taxes, depreciation and amortization would be $1.42 billion, according to SEC filings. Current fiscal 2008 analyst estimates -- about seven months later -- show a mean projection of $1.076 billion, according to Factset, or 24% lower.
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