Confidence appears to be ebbing on Wall Street in Tribune Co.’s ability to pull off a complex, $8.2 billion deal to take itself private in partnership with Chicago billionaire Sam Zell, the Chicago Tribune reports.
Following Tribune’s announcement late Wednesday that May revenues had fallen 11.1 percent — bringing the year-to-date decline to 5.6 percent — the company’s stock lost 1.3 percent to close at $29.57 Thursday, or 13 percent below the $34 price Tribune pledged to pay for its shares outstanding.
The bid price for the largest tranche of Tribune’s newly issued $7 billion in debt, meanwhile, fell about a point below its price when the debt was sold in mid-May, said Chris Donnelley, a vice president at Standard & Poor’s Leveraged Commentary & Data, a service that tracks the leveraged-finance market.
“It’s an indicator that the market’s appetite for the deal is waning,” Donnelley said.
A Tribune representative declined to comment for this story and Zell was out of the country and unavailable.
Donnelley pointed out that the price of Tribune stock and debt doesn’t matter much at the moment since the second half of Tribune’s deal won’t likely hit the market until later this year. If results at the company, which owns the Chicago Tribune, Los Angeles Times, WGN-Ch. 9 and other media properties, stabilize in the coming months, as many observers expect, the market’s worries could evaporate.
But other analysts said the falloff in prices reflects growing concern that Tribune’s financial outlook is deteriorating and that it may be difficult to close the second half of the deal, which will involve syndicating an additional $4.2 billion in debt.
