Tribune seeks approval to send plan to creditors

*Opponents attack proposed settlement

*Court examiner’s report due in July

By Tom Hals

WILMINGTON, Del., May 20 (BestGrowthStock) – Tribune Co sought
court approval on Thursday to put its reorganization plan to a
creditor vote, with objectors attacking a proposed settlement
of legal claims tied to the leveraged buyout blamed for its
bankruptcy.

Junior bondholders wanted the owner of the Los Angeles
Times, Chicago Tribune and New York’s WPIX television station
to wait for a report by a court-appointed examiner before
sending out the disclosure statement, which describes the plan,
and ballots.

But that report will not be available until July.

An attorney for the junior bondholders, who will get
nothing from the planned reorganization, told the Delaware
Bankruptcy Court the disclosure statement was a garish
advertisement for the settlement at the heart of the company’s
plan.

The company aims to include in the disclosure statement a
hyperlink to the examiner’s report, which will be available by
July 12. Under their plan, creditors will have until the end of
July to vote.

The examiner will report on the potential value of claims
the company may have against lenders, management and advisers
for landing Tribune in bankruptcy in 2008, about a year after
real estate developer Sam Zell took control through an $8
billion leveraged buyout.

The company has proposed releasing any potential
liabilities and in return giving a stake in the company worth
about $450 million to senior bondholders, who otherwise would
lose their investment. That represents a recovery for those
investors of about 35 percent.

“Mr. Zell and various members of Tribune’s board and senior
management have significant, personal interest in seeing all
LBO-related litigation ‘swept under the rug,’ especially when
the proposed settlement does not require them to pay any
amounts and also shelters them from all further litigation
exposure,” the junior bondholders’ letter to creditors said.

The letter warned the reorganization plan would be subject
to lengthy court fights if it is not a consensual plan. Other
parties seemed to agree.

Holders of senior loan claims, who will get the company’s
equity under the proposed reorganization, doubt there is much
likelihood of success of any litigation tied to the leveraged
buyout.

They have argued the company is giving too much away to
head off those disputes.

They also wanted the Tribune to disclose that their group
is larger than the group of senior loan claimants who support
the plan.

The judge, Kevin Carey, asked the parties to try to draft a
letter or find a way that they could explain their differences
that could be included in the disclosure statement.

Depending on the outcome of their work during the lunch
break, Carey said he may have to continue the hearing on
another day.

“It’s been a long time since I crawled this far into the
weeds on a disclosure statement,” Carey said.

The case is In re: Tribune Co et al, U.S. Bankruptcy Court,
District of Delaware, No. 08-13141.

Investing Basics
(Reporting by Tom Hals, editing by Leslie Gevirtz)

Tribune seeks approval to send plan to creditors