Last September we noted that Tribune (TRBAA) was following the industry playbook and spinning off its publishing assets into a separate company. According to a recent article, the company is eyeing to complete the transaction sometime in the middle of the year, either Q2 or early Q3. At the time of the announcement, the company estimated that the process was expected to take 9-12 months so it sounds like things are right on track.
That must mean progress is being made on the transaction and indeed, the company filed its initial Form 10 just a few months after the announcement. The filing includes plans to heap an unspecified pile of debt onto the spinco in order to pay a dividend to the parent company. Additionally, the parent company will retain the real estate assets meaning the spinco will have to pay rent to remain in its current facilities. While these are relatively common features of recent spinoff transactions, the plans have drawn the ire of some powerful politicians. In particular, Rep Henry Waxman, a California democrat whose district ‘relies’ on the LA Times (one of the spinco’s assets) for news, has been very vocal in his concerns regarding the transaction, fearing that the LA Times will be in financial peril. Other critics of the move have supported that idea by pointing out that News Corp’s (NWSA) recent newspaper spinoff was armed with a sizable cash balance, a feature that was viewed by many as a strength and critical to its survival. Tribune executives have since tried to assuage the congressman’s concerns about the future of his paper, but apparently they were unsuccessful.
Regardless of your position on the issue of a Congressman interfering with the company’s plans, I found it interesting that the company took his concerns seriously enough to meet with him. Of course, that was before he announced his retirement from Congress at the end of this term. We will never know for sure if this will have any impact on the spinoff, but it will be interesting to see the final size of the debt load on the new company.
Disclosure: Author holds no position in any stock mentioned.
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