Earlier today the Chicago Tribune Filed for Chapter 11 Bankruptcy. Here are the highlights:

  • Tribune says has $7.60 billion assets, $12.97 billion debts as of today, December 8
  • Tribune says unsecured creditors include JPMorgan Chase Bank NA as agent, with $8.57 billion claim under senior facility
  • Tribune says unsecured creditors include Merrill Lynch Capital Corp as agent, with $1.6 billion claim under bridge loan facility
  • Tribune says equity holders include Tribune Employee Stock Ownership Plan, with 56.52 million common shares

Chicago Cubs For Sale

In the wake of the Tribune bankruptcy, the Chicago Cubs (owned by the Tribune) are now on the block and the Cubs Bids are Said to Be Less Than $1 Billion.

The bids Tribune Co. received for the Chicago Cubs baseball team ranged from $850 million to $950 million and should decline now that the parent company is in bankruptcy, a person with knowledge of the process said.

Tribune, saddled with $12.9 billion in debt after being taken private by billionaire Sam Zell a year ago, needed to sell the Major League Baseball team for at least $1 billion and repay its Tranche X loan to avoid breaching yearend debt covenants, according to CreditSights Inc. debt analyst Jake Newman.

“I’ve always been skeptical that they could get that much for the Cubs,” Newman said in an interview today before Tribune filed for Chapter 11 bankruptcy protection.

The Cubs weren’t included in Tribune’s filing, and the sales process for the team, ballpark and related assets will move forward. Since taking over Tribune, Zell has been cutting jobs and selling assets including Newsday in Long Island, New York, to cope with the debt load and declining revenue.

A second person with knowledge of the process said the team over-estimated the potential for ticket price increases, on-site real estate development and baseball’s willingness to approve an owner who borrowed huge sums to purchase the franchise.

Questions of the Day

  • Why did Sam Zell, a commercial real estate guru, think he could run a newspaper?
  • Why would anyone buy a newspaper with the economy clearly headed into a recession, even if they thought they could run a newspaper?

Both questions remain a mystery. All I can hypothesize is that some players, like Zell, simply have to be in the game at all times.

Don’t fall into the same trap. If you do not like the pitch, don’t swing at it. There is nothing wrong with being on the sidelines in cash. Ask Sam Zell.

Mike “Mish” Shedlock
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