Tribune Co. Subpoenaed Over Employee Stock Plan - 10 Apr 2009
The Labor Department subpoenaed the Tribune Company over its employee stock plan, which was crucial to the purchase of the company by the billionaire Sam Zell, left. The company disclosed the subpoena, issued in March, in a bankruptcy court filing and said it had handed over the documents. A Tribune spokesman was not available for comment.
The agency’s questions relate to the Employee Retirement Income Security Act, a law intended to protect people
in employee retirement plans. The stock plan was an important piece of
Mr. Zell’s plan to acquire the company in an $8.2 billion deal that
involved $13 billion in debt. He intended for the stock plan to become
the largest owner of the company, which would let it avoid corporate
taxes. That, in turn, was supposed to help a company turnaround.
http://www.nytimes.com/2009/04/11/business/media/11bizbriefs-TRIBUNECOSUB_BRF.html?_r=1
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Chicago Tribune UPDATE 20 Aug 2009
Report: Tribune employees to get shortchanged
Los Angeles Business from bizjournals http://www.bizjournals.com/losangeles/stories/2009/08/17/daily27.html
Creditors who seek to oust Tribune CEO Sam Zell probably won’t keep
the employee stock ownership plan -- a move that will leave employees
with worthless shares, the New York Post reports Wednesday.
The Post cites a source involved in creditor negotiations.
In 2007, Zell used the stock plan to gain tax benefits on the $8.2 billion Tribune buyout.
Under the plan, workers have 100 percent ownership of the company
but no say on management or the board. Bankruptcy views them as
shareholders.
On Tuesday, the Post reported that Tribune is giving up on an attempt to buy a large stake in the company. A report surfaced Friday that the real estate tycoon could be ousted as part of reorganization plan put forth by creditors.
Tribune, which Zell privatized in 2007, operates the Los Angeles Times and KTLA.
Tribune entered bankruptcy protection in December.
Friday’s report says that the creditors Zell owes payments to plan
to stage a takeover of their own and sell off the company's newspapers
and broadcast stations as they see fit.
Zell owes these creditors $8.6 billion, and those creditors are
reportedly becoming impatient with him. But the creditors have until
Nov. 30 before they can file a plan since Zell was granted an extension
on his own Tribune reorganization. That extension was granted on Aug.
10.
Reports came out in June that stated Zell would lose Tribune to the same group of investors.
That report stated that "the plan centers on a debt-for-equity swap
that probably would give the senior lenders a large majority ownership
stake in the reorganized company.