Trib Co. Facing Bankruptcy Emergency

Tribune Co. is “preparing for a possible bankruptcy-protection filing as soon as this week, according to people familiar with the matter, opening a new front of trouble for the newspaper industry,” the Wall Street Journal reported late Sunday.

“As Tribune continues discussions with its lenders to rework its debt load, the newspaper-and-television concern in recent days has hired Lazard Ltd. as its financial adviser and a legal counsel for a possible trip through bankruptcy court, according to people familiar with the matter.

“A Tribune spokesman said the company doesn’t comment on rumors or speculation. A Lazard spokesman didn’t immediately respond to a request for comment.

The appointments underscore the deepening distress for Tribune and other publishers. Newspaper businesses are being battered by dwindling advertising sales and carrying debt loads that are unmanageable in current market conditions. People in the industry expect some papers will need to seek bankruptcy protection or fold in coming months.

“Tribune has been on wobbly footing since last December, when real-estate mogul Sam Zell led a debt-backed deal to take the company private. Tribune so far has stayed ahead of its $12 billion in borrowings with the help of asset sales, but now dwindling profits are tightening the noose. The company’s cash flow may not be enough to cover nearly $1 billion in interest payments this year, and Tribune owes a $512 million debt payment in June.”

AP reports: “Tribune Co. spokesman Gary Weitman told the newspaper that the company was looking at all its options and had not made any decision on the matter.

“Weitman did not immediately respond to requests from The Associated Press for comment. Lazard spokeswoman Judi Mackey said the firm declined to comment on the reports.”

The New York Times report overlaps:

“Tribune has hired bankruptcy advisers as the ailing newspaper company seeks to stave off a potential bankruptcy filing, people briefed on the matter said.

“The newspaper, which was taken private last year by billionaire investor Samuel Zell, has hired the investment bank Lazard and the law firm Sidley Austin, these people said. Tribune has been hobbled by debt related to that sale last year, which has been compounded by the growing drought of advertising for newspapers.

“It is only the latest — and biggest — sign of duress for the newspaper industry yet. Several newspaper companies have struggled to cope with declining revenues and mounting debt woes.

“While Tribune has sought to ameliorate its woes by selling off assets like the Chicago Cubs, the company still faces a looming debt crunch. Tribune hired Lazard several weeks ago to assess its options, these people said. Sidley Austin is a longtime outside adviser to Tribune, and it has a well-respected bankruptcy practice as well.”