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Tribune Co. emerges from bankruptcy after four years

Tribune Co. parent company Chicago Tribune will emerge from bankruptcy Monday after four years. | Richard A. Chapman~Sun-Times

Tribune Co., the parent company of the Chicago Tribune, will emerge from bankruptcy Monday after four years. | Richard A. Chapman~Sun-Times

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Updated: December 31, 2012 1:45PM

Tribune Co., owner of the Chicago Tribune and WGN TV and radio, emerged from bankruptcy on Monday, ending a four-year Chapter 11 reorganization precipitated by real estate tycoon Sam Zell’s attempt to use debt to take over the company.

The reorganization leaves the company in the hands of its principal creditors, Oaktree Capital Management LP; Angelo, Gordon & Co., and JP Morgan Chase & Co. In announcing the exit from Chapter 11 late Sunday night, the company also listed members of its new board.

Among the new directors is Peter Liguori, a former executive for the Fox network and the Discovery cable channel. Liguori is widely expected to be named Tribune’s CEO. Eddy Hartenstein, who currently holds the post, also has a seat on the board, and Tribune’s announcement said he will remain as CEO until the new board convenes in a few weeks.

Other directors are Bruce Karsh, president and co-founder of Oaktree; Oaktree Managing Director Ken Liang; Peter Murphy, founder of Wentworth Capital Management LP; Ross Levinsohn, former CEO of Yahoo Inc., and entertainment lawyer Craig Jacobson.

“Tribune will emerge from the bankruptcy process as a multi-media company with a great mix of profitable assets, strong brands in major markets and a much improved capital structure,” Hartenstein said in a press release.

He also issued a separate statement to employees, thanking them for hard work during the four years and saying the company is “well-positioned for success in 2013.”

His announcement will stir fears among many employees, however, as Tribune’s new owners are expected to sell the company in pieces, reduce staff and probably separate its newspapers from its more profitable broadcasting units. Tribune publishes eight major newspapers, including the Los Angeles Times and Baltimore Sun, and owns 23 TV stations.

In emerging from bankruptcy, Tribune said it will receive a $1.1 billion senior secured-term loan and a $300 million asset-based revolving line of credit. The loan will fund certain payments to creditors and the credit line will be used for ongoing operations.

A federal bankruptcy judge approved the reorganization plan in July, but final action had to wait until November, when the Federal Communications Commission approved the transfer of the company’s broadcast licenses to the new company.

The Tribune bankruptcy was inordinately complex, featuring warring groups of creditors. Some were emboldened to pursue claims because of a 2010 report by an outside examiner that concluded top executives at Tribune had engaged in “intentional fraud” to close the sale for Zell.

Zell had purchased the company for $8.2 billion in 2007, but the deal left it with $13 billion in debt just as changes in technology started reducing advertising in traditional print media. The company no longer generated enough cash to cover the debt as well as operations.

The restructuring plan, proposed by Tribune and backed by the major creditors, was modified three times to meet objections.

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