U.S. newspaper publisher Tribune Co said on Thursday it has agreed with creditors on a plan that would help it exit bankruptcy protection later this year.
The publisher of the Chicago Tribune and Los Angeles Times, which filed for bankruptcy protection in December 2008, said it reached a deal with major creditors and lenders including JPMorgan Chase & Co, Angelo Gordon, Centerbridge Partners and its Official Committee of Unsecured Creditors.
Under the plan, the company would emerge from bankruptcy, significantly deleveraged, with its business units intact and with adequate liquidity for operating and capital needs, Tribune said in a statement.
The company's senior credit facility lenders would control 91 percent of the stock of the reorganized company and senior noteholders would receive a combination of cash, debt and stock to repay their claims.
The agreement also settles all potential claims stemming from the $8.2 billion Tribune leveraged buyout led by real estate developer Sam Zell in 2007, Tribune said in a statement.
The settlement does not have the support of a group of junior bondholders, according to their attorney Robert Stark of the law firm Brown Rudnick.
Represented by Wilmington Trust Co, the holders of $1.2 billion in Tribune debt have warned for months that the company would strike a deal like Thursday's that would release Zell and lenders from any liability for the company's collapse and the losses suffered by bond investors.
They have complained of being cut out of the negotiating process and have criticized the makeup of the creditors' committee, which includes bank lenders which are usually excluded.
Seven of the nine members of the official committee are economically motivated to reach a quick and rather easy plan settlement with a Zell-control management, the bondholders wrote in a court filing last year.
Tribune, which sold its stake in the Chicago Cubs baseball team and Wrigley Field earlier in the bankruptcy case, said it expects it will be able to file a reorganization plan before a court hearing next Tuesday. The agreement and settlement are subject to court approval.
The case is In re: Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.
(Reporting by Emily Chasan and Robert MacMillan; additional reporting by Jonathan Stempel and Tom Hals; Editing by Phil Berlowitz and Muralikumar Anantharaman)