Tribune Co. employees voted in favor of an $8.2 billion buyout of the media empire and are awaiting federal approval.
They also hope that billions in expected financing doesn't stall amid fallout in the beleaguered credit market.
About 97 percent of Tribune shareholders confirmed the deal led by real estate magnate Sam Zell, which was initially agreed to in April. They received shares worth $34 – a premium to Tuesday's close at $27.98.
"We're pleased that Tribune shareholders recognize the value of this transaction and have voted overwhelmingly to approve it," said Tribune Chairman and CEO Dennis FitzSimons. "With financing fully committed, we anticipate closing the transaction in the fourth quarter."
While the company technically will be owned by employees, Zell emerge as its chairman with a 40 percent stake. He personally invested $315 million in the business.
The media conglomerate comprises 23 newspapers — including the Chicago Tribune, Los Angeles Times, and Newsday in New York – and 11 television stations. It also owns Major League Baseball's Chicago Cubs.
The 160-year-old Tribune Co. was forced onto the auction block last year by a group of owners and board members disappointed with the company's performance. (Its 2006 operating profit was down 4 percent at $1.09 billion and dividends were flat at 72 cents.) Little interest emerged, however, and the company had to consider liquidating.
That's when Zell offered stockholders $33 a share to buyout the company. But reports of a $34 counter-bid from Los Angeles-based billionaires Eli Broad and Ron Burkle prompted Zell to match.
He was flush with cash after selling his Equity Office Properties Trust, owner and manager of a 590-building chain, to private equity firm Blackstone Group last November for $36 billion.
He says of Tuesday's vote: "Tribune Company is reasserting itself as a national leader in news generation and distribution. Despite the recent upheaval in the credit markets, my view of the company as an investment has not changed."
But the plan creates about $12 billion in debt and the recent credit crunch could make it harder to borrow money – especially since Tribune's advertising revenues have faltered.
Tribune has financing commitments from Citigroup, Merrill Lynch and JPMorgan Chase to fund the transactions. In the first stage, Tribune will raise $7 billion of new debt — of which $4.2 billion will be used to complete the tender offer and the
remaining $2.8 billion will be used to refinance existing bank credit facilities.
In the second stage, Tribune will raise an additional $4.2 billion of debt which will be used to buy all the remaining outstanding shares of the company. Tribune's existing publicly-traded bonds are expected to remain outstanding.
The company will be led by a board of directors with an independent majority. FitzSimons, who retains the posts of CEO and president, will remain a member of the board, along with at least five independent directors and an additional director affiliated with Zell.
The Tribune previously announced that following the 2007 baseball season, it will sell the Chicago Cubs and the company's 25 percent interest in Comcast SportsNet Chicago. The sale of the Cubs is subject to the approval of Major League Baseball, and is expected to be completed in the fourth quarter. Proceeds will be used to pay down debt.