UPDATE 3-Tribune widens deal to help it exit bankruptcy

* Tribune widens settlement aimed at ending bankruptcy

* JPMorgan, unsecured creditors join agreement

* Deal helps settle claims stemming from company’s buyout
(Adds loan prices paragraphs 6 and 15, byline)

By Tom Hals

WILMINGTON, Del., Oct 12 (BestGrowthStock) – Tribune Co said on
Tuesday it reached agreement with more parties to its
bankruptcy as it tries to bring its publishing and broadcasting
business out of Chapter 11.

JPMorgan Chase & Co (JPM.N: ) and unsecured creditors joined
a settlement the company previously reached with two hedge
funds that hold a large part of it senior loans.

The publisher of the Chicago Tribune and Los Angeles Times
filed for bankruptcy in 2008, a year after real estate
developer Sam Zell acquired the company in a leveraged buyout
that was funded through piles of debt.

Tribune has spent its nearly two years in Chapter 11
fighting with creditors over who is to blame for the
bankruptcy, and whether creditors found to be at fault should
be paid what the company owes them.

The settlement does not change plans to turn the company’s
ownership over to holders of senior loan claims, which includes
JPMorgan as well as numerous hedge funds.

The value of Tribune’s loans rose following the
announcement as the expanded settlement brings it closer to
exiting bankruptcy. For details, see [ID:nRLP40548a]

As part of the new settlement, senior bondholders will
receive a total of $420 million, or 32.73 cents on the dollar,
plus their share of a litigation trust.

The trust will pursue legal claims, including those against
advisers, directors and officers, stemming from the 2007
leveraged buyout.

To get the unsecured creditors on board, the company
increased the amount it proposes to give to bondholders by $120
million from its previous offer. The additional money will be
contributed by recipients of pre-bankruptcy payments on the
loans that supported the leveraged buyout.

The company’s statement did not identify the recipients of
the pre-bankruptcy payments, but the Robert R. McCormick
Tribune Foundation and the Cantigny Foundation were major
shareholders prior to the buyout, according to court
documents.

Unsecured creditors had taken aim at these foundations,
arguing that they may have benefited from a transaction that
they argued was a “fraudulent conveyance.”

The lenders will backstop the agreement to ensure Tribune’s
estate has the money when it emerges from bankruptcy, the
company said.

The expanded settlement has been endorsed by a
court-appointed mediator, Tribune said.

The settlement looks very similar to a deal reached earlier
this year, although that agreement collapsed after an examiner
identified possible legal claims stemming from the leveraged
buyout.

Even loan prices, which fell following the examiner’s
report in July, have risen back to where they traded prior to
the appointment of an examiner.

Holders of the company’s junior bonds, who are owed around
$1 billion, do not support Tuesday’s settlement, according to
their attorney Robert Stark, of law firm Brown Rudnick.

Tribune did not mention junior bondholders, but previous
proposals did not provide a recovery for them.

The deal still needs court approval and the company said it
would file a detailed plan and supporting court documents by
Friday.

The case is In Re Tribune Co, U.S. Bankruptcy Court,
District of Delaware, No. 08-13141.
(Reporting by Tom Hals, editing by Dave Zimmerman)

UPDATE 3-Tribune widens deal to help it exit bankruptcy