Tribune is unlikely to accept any of the bids on its assets and could decide within days whether to adopt a plan to spin off its broadcast TV division and borrow money to pay out a one-time cash dividend, according to a story in the Wall Street Journal
Disatisfied with all of the bids submitted by companies seeking to acquire its assets, Tribune’s board of directors will meet early this wek to discuss details of a self-help plan, according to a story at WSJ.com. The self-help plan has been on the table for months but has gained traction in recent weeks, according to the story, written by Sarah Ellison and Dennis K. Berman.
The idea of borrowing money to pay a one-time dividend is similar to the proposal put forth by real-estate investor Eli Broad and supermarket magnate Ron Burkle. That proposal, however, involved taking on more debt than the self-help proposal, which would allow Tribune to transfer from of the debt from the dividend borrowing onto the new TV company, limiting the amount of debt on Tribune’s balance sheet.
One issue in determining the outcome has been placing a value on the Tribune TV stations, according to the story. Private-equity firm Carlyle Group offered to buy the TV stations for about $4 billion, but talks between Tribune and Carlyle stalled after the two sides couldn’t agree on price, according to the story.
Tribune determined spinning off the stations was preferable, because it could do the transaction tax-free and avoid paying the taxes that would be involved in a sale to Carlyle, the story said.
WSJ Online subscribers can read the full story here.