In a hedge fund's bid for Tribune's newspapers, a hidden risk lurks in the fine print
In its bid to acquire Tribune Publishing, the hedge fund Alden Global Capital vowed to provide $375 million in cash to the owner of the Chicago Tribune, the Baltimore Sun and other titles — a theoretically welcome influx to an investment-starved newspaper chain.
But industry and financial experts have looked at the fine print and see something starkly different: Alden, they say, has already signaled it plans to saddle Tribune with debt that could further hollow out the company, and it may not have $375 million available to begin with.
Alden has made the certainty of its finances a central part of its push to acquire Tribune, saying in a December letter that it “can fully finance the Transaction with cash on hand” and “we will have no financing conditions and will not require third party debt or equity to finance the Transaction.”
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But the deal includes a brief but potentially critical passage saying Alden “has the right to seek to finance a portion or all of the $375,000,000 in cash with the proceeds from debt and/or equity financing from its affiliates or third parties.”
“That means they’re going to try to borrow money,” Arthur said. He said it would not surprise him to see Alden borrow heavily against Tribune’s revenue and put in as little of its own money as possible.
Read more: https://www.washingtonpost.com/business/2021/05/06/alden-tribune-hidden-risk/
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