Bloomberg News

Tribune's $1.6 Billion Loan Gets B- Rating From S&P

December 18, 2007

Tribune Co.'s proposed $1.6 billion unsecured bridge loan, to be used to help fund the company's buyout led by billionaire Sam Zell, was rated B- by Standard & Poor's and put on watch for a possible cut.

The junk rating is six levels below investment grade. The publisher's other ratings, including a B+ on corporate debt, remain on watch pending the buyout's completion, S&P credit analyst Emile Courtney said today in a report. Moody's Investors Service ranks the loan two levels lower than S&P at Caa2.

Tribune, owner of the Chicago Tribune, agreed in April to go private in an $8.2 billion deal financed almost entirely by debt. Tribune reduced the proposed bridge loan this month, from $2.1 billion, and said it will use cash to make up the difference.

The company has a higher probability of defaulting on its debt payments because of the increased leverage from the buyout, Moody's analyst John Puchalla said in a report today. Moody's cut the company's corporate credit rating two levels to B3, or six levels below investment grade. Moody's said in November that the rating would drop to B3 if the deal closed.

The U.S. Federal Communications Commission granted Tribune waivers Nov. 30 to own newspaper-TV combinations in five cities. Today the FCC approved rules that allow newspaper publishers to own broadcast stations in the biggest U.S. cities and limit growth for cable companies.

Tribune, based in Chicago, rose $1.02, or 3.2 percent, to a 13-month high of $33.31 at 4 p.m. in New York Stock Exchange composite trading (TRB:US). The buyout offer is $34 a share.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.


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