Let the dance begin.
“Grave dancer” Sam Zell, the Chicago real estate tycoon known for wringing value from seemingly dead assets and who is orchestrating an $8.4 billion deal to purchase the parent company of The Baltimore Sun, 10 other daily newspapers and 23 broadcast TV stations, now sits on that company?s board.
“It?s part of the first stage of the transaction,” Tribune Company spokesman Gary Weitman said of developments showcased at the annual shareholder meeting, “which includes the establishment of the [Employee Stock Ownership Plan] and purchase of the shares by the ESOP, the initial investment by Mr. Zell and his joining our board, and the tender offer.”
Zell brokered a deal to have a tax-exempt ESOP buy back Tribune stock at $34 a share in a yearlong series of financial, compensatory, regulatory and legal moves that, for $8.4 billion in new debt, envisions nonunion employee ownership of the company with Zell as board chairman.
In addition, Zell would have the option of exercising a warrant for 40 percent of the company?s shares at an initial aggregate price of $500 million ? and all this for a net reported investment of only $315 million.
Zell has stated that he won?t sell off Tribune assets ? though its Chicago Cubs will be sold at season?s end, and a local group of 30 investors covets The Sun ? but skeptics believe that either the company?s $12 billion debt load or the Federal Communications Commission will dictate a sell-off.
For the moment, however, Zell seems intent only on extracting Tribune?s value, including trying to charge Internet search giants Google and Yahoo for Tribune content.
“A lot of people thought the container-leasing business was a horrific business,” Zell told a gathering of Stanford University business and law students in April, according to The Stanford Daily. “I made a half-billion dollars. Should I go on, or do you get the message?”
