Capital Markets

Tribune Heralds $2 Billion Buyback

Media giant will repurchase 25 percent of its total outstanding shares.
Stephen TaubMay 30, 2006

The Tribune Co. announced that it will repurchase $2 billion of its common stock, or 25 percent of its total outstanding shares.

The media giant — which owns the Chicago Tribune, the Los Angeles Times, and more than 20 television stations, will buy up to 53 million shares in a modified Dutch auction tender offer, 10 million shares from its principal shareholder following completion of the tender, and up to 12 million shares through open-market repurchases after the tender.

Stockholders will be able to tender shares at a price between $28 and $32.50. The company will fund the buyback through a combination of bank debt and publicly issued bonds. The incremental debt will be repaid from free cash flow and from the proceeds from at least $500 million in asset sales, which could include certain non-core broadcasting and publishing assets as well as real estate and securities held for investment, the company elaborated.

Even so, the company warned that its credit ratings will probably suffer as a result of the increased debt.

“These stock repurchases demonstrate our confidence in the company and its future and represent a very meaningful step in our commitment to enhance value for shareholders,” said chairman, president, and chief executive officer Dennis FitzSimons, in a statement. “They also reflect our strong belief that Tribune’s current share price does not adequately reflect the fundamental value and long-term earnings prospects of the company’s businesses.”

Tribune’s share price has fallen 46 percent since the end of 2003, according to Bloomberg.