Tribune's newspaper segment, including Los Angeles Times and seven other newspapers, to pay US$275M to separate from parent company; new company, Tribune Publishing, to borrow US$325M to finance dividend
April 12, 2014
(Los Angeles Times)
– Tribune Co.'s newspaper unit will pay a dividend of up to $275 million to its parent when it is spun off later this year, according to a government filing.
The new Tribune Publishing Co. will own the Los Angeles Times and seven other newspapers. Shares of the company will trade on the New York Stock Exchange under the ticker symbol TPUB.
Details about the dividend were made public in a lengthy filing with the Securities and Exchange Commission submitted late Friday.
The dividend has sparked opposition from critics who say it would weigh on the company at a time of diminishing advertising revenue and intensifying digital competition.
In a letter sent Friday to Tribune Chief Executive Peter Liguori, Rep. Henry A. Waxman (D-Beverly Hills) said six media experts he consulted have serious concerns about the fate of The Times under the current spinoff plan.
The dividend would "place the long-term viability of the Los Angeles Times and other Tribune papers at risk," Waxman wrote.
"When the newspapers become a separate company, they need the financial and other resources necessary to compete effectively in the Internet age," he wrote.
Times Publisher Eddy Hartenstein, who will become chairman of the new Tribune Publishing unit, said he was "extremely confident that the plan put forth by Tribune Co. is sound, reasonable and will help protect and build a strong future for the Los Angeles Times and Tribune's other newspapers for years to come."
According to Hartenstein, "the assertions of the academics consulted by the congressman provide no new insight and in many cases are simply wrong."
Tribune Publishing will borrow $325 million to finance the dividend. In addition, the unit would have a "revolving credit facility" of up to $150 million and letters of credit to borrow an additional $60 million, according to the filing.
Tribune Publishing acknowledged in the filing that the debt could place it at a competitive "disadvantage" and increase the company's "vulnerability" to economic or industry downturns.
The filing also provided details about the compensation package of Jack Griffin, who will be the chief executive of Tribune Publishing, and named six members of the board of directors.
Griffin will receive a $1-million annual salary, a target $1-million annual bonus and $1.5 million annually in Tribune Publishing stock. He will receive a $2-million severance payment if he leaves the company with "good reason," according to the filing.
In addition to Griffin and Hartenstein, other Tribune Publishing directors include David E. Dibble, former executive vice president of central technology at Yahoo Inc., and Philip G. Franklin, chief financial officer of Littelfuse, Inc., an electronic components maker.
The other two board members are Renetta McCann, chief talent officer at the Leo Burnett Co. advertising agency, and Ellen Taus, former chief financial officer for the electronic publishing division of the New York Times Co.
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