Gannett Co.’s interest in Los Angeles Times parent company tronc hit a major snag Thursday as a news report said lenders have withdrawn their financing.
Bloomberg reported Thursday that “several lenders” have backed out of financing the proposed deal, which at $18.75 a share would be valued at about $1 billion. The online report said the lenders backed out over concerns about the financial health of both Gannett and tronc.
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The report, which was not confirmed by either company, sent Gannett shares tumbling 17 percent Thursday to close at $8.21. Tronc shares plunged 28 percent to close at $12.27.
The report followed several other developments reported over the previous 24 hours, including the abrupt cancellation of a tronc board meeting Wednesday afternoon and the passing of a self-imposed deadline Thursday to announce the deal concurrent with Gannett’s quarterly earnings release.
Calls and emails to both Gannett and tronc were not returned.
Gannett has been trying for months to purchase tronc, which owns the Times, the Chicago Tribune, the San Diego Union-Tribune, the Baltimore Sun and other publications. Two previous Gannett offers, one in April for $12.25 a share and another in May for $15 a share, were rejected by tronc’s board as being too low.
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Gannett owns USA Today, the Arizona Republic, and several smaller publications.
Media analyst Ken Doctor reported early Thursday in a post for Politico that the cancellation of the tronc board meeting was in part due to growing concerns over a provision in the deal that would have given the Los Angeles Times greater independence from Gannett than tronc’s other publications. This provision was to accommodate the wishes of Los Angeles billionaire Patrick Soon-Shiong, who invested $70 million in tronc in May. Soon-Shiong has long sought to return the Times to local ownership.
Reached Thursday afternoon after the Bloomberg report surfaced, Doctor told the Business Journal that Soon-Shiong is now even more crucial to pulling off the deal between Gannett and tronc. He said lenders grew increasingly concerned about Gannett’s financial strength after earnings reports at both Gannett and other print media companies showed continuing underlying weakness on the revenue side.
“Now it’s an issue of how much more Soon-Shiong has to invest in tronc to share the risk and ease the concerns of the (Gannett) lenders,” Doctor said.
Public policy and energy reporter Howard Fine can be reached at email@example.com. Follow him on Twitter @howardafine.