Tribune holders approve $8.2B plan to go private
The publisher's employee stock ownership program is expected to hold 100% of the company once the transaction closes.
NEW YORK (CNNMoney.com) -- Tribune Co. shareholders have approved an $8.2 billion plan to take the company private with 100 percent ownership by the company's employee stock ownership plan and with real estate mogul Sam Zell as an investor.
At a shareholder meeting in Chicago, approximately 97 percent of the shares voted were cast in favor of the deal, representing approximately 65 percent of the total shares outstanding and entitled to vote at the meeting, the Los Angeles Times and the Chicago Tribune publisher announced Tuesday.
"We're pleased that Tribune shareholders recognize the value of this transaction and have voted overwhelmingly to approve it," said Dennis FitzSimons, Tribune chairman in a press release.
"I believe Tribune Company is reasserting itself as a national leader in news generation and distribution," Zell said. "Despite the recent upheaval in the credit markets, my view of the company as an investment has not changed."
The deal is expected to close in the fourth quarter pending FCC approval and other closing conditions.
Financing will be provided by JPMorgan Chase (down $0.29 to $46.20, Charts, Fortune 500), Merrill Lynch (Charts), Citigroup (down $0.33 to $48.06, Charts, Fortune 500) and Bank of America (down $0.05 to $51.30, Charts, Fortune 500), according to a report from The Wall Street Journal.
The announcement comes amid shareholder concern that the company's weak financial performance and the worsening credit market could make financing a buyout difficult.
Rising subprime mortgage default rates have led to a snowballing credit crisis and intense market volatility.
Tribune's stock sank to a 9-year low last week. Shares closed 3.6 percent higher on the New York Stock Exchange Tuesday and were gaining 3.1 percent in after-hours trading.
In April, Tribune announced Zell's plan to support an $8.2 billion deal to take the company private with a $315 million investment. Zell would receive convertible preferred stock in the company, an employee stock program would be the main holder and Zell will have the right to acquire up to 40 percent of Tribune's common stock.
Tribune was open to considering rival offers up until shareholders approved a deal.
"As a private company, Tribune will have greater flexibility to transform our publishing/interactive and broadcasting businesses with an eye toward long-term growth," Chairman and CEO Dennis FitzSimons said in April. "Importantly, our employees will have a significant stake in the company's future."
Credit ratings agency Standard & Poor's downgraded Tribune to a B+ from a BB- Monday saying the company would remain on credit watch until the buyout closes.