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Tribune Publishing board backs Alden bid, open to higher offer

Chicago Tribune

Tribune Publishing’s board is recommending shareholders approve Alden Global Capital’s $630 million offer to buy the Chicago-based newspaper company, but gave a Maryland hotel executive the green light to pursue financing for a higher bid, according to a Securities and Exchange Commission filing Tuesday.

Alden, a New York-based hedge fund and Tribune Publishing’s largest shareholder with a 31.6% stake, reached an agreement last month to buy the rest of the company at $17.25 per share and take it private. The deal, which the company said should close in the second quarter, requires approval from two-thirds of Tribune Publishing’s other shareholders in a proxy vote to be scheduled.

A view of the Chicago Tribune Freedom Center from the Chicago River in the River West neighborhood on June 8, 2019.

Regulators also have to sign off on the deal. In addition to the Chicago Tribune, Tribune Publishing owns The Baltimore Sun; the Hartford (Connecticut) Courant; the Orlando (Florida) Sentinel; the South Florida Sun Sentinel; New York Daily News; the Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.

Stewart Bainum, the chairman of Maryland-based Choice Hotels International, who signed a nonbinding agreement to buy the Baltimore Sun for $65 million upon Alden’s acquisition of Tribune Publishing, made an $18.50 per share offer for the whole company on March 16, Tribune Publishing said in the SEC filing.

Bainum has committed $100 million but needs additional financing for the proposed $650 million acquisition, according to the filing. Bainum told the board “there would be significant interest among financing sources in joining his effort,” the filing stated.

Earlier this month, the New York Times reported that negotiations between Bainum and Alden had hit a snag over the terms of a transition services agreement for the Sun, leading Bainum to seek an exit from the deal to pursue buying all of Tribune Publishing.

A three-member special committee of the Tribune Publishing board, which has been vetting the Alden offer, agreed Friday to “grant a waiver of certain restrictions” to allow Bainum to pursue financing for the larger bid, according to the filing.

Tim Ragones, a spokesman for the Tribune Publishing special committee, declined to comment Tuesday evening. A Bainum spokeswoman and a spokesman for Alden did not immediately respond to requests for comment.

Alden has three of seven seats on the Tribune Publishing board, but its representatives recused themselves during the Feb. 15 vote to recommend shareholders approve the hedge fund’s $17.25 per share offer. Tribune Publishing CEO Terry Jimenez was the sole dissenting vote, according to the SEC filing.

Jimenez said the price proposed by Alden “was inadequate,” and considered “remaining as a stand-alone company in the best interests of the company and its stockholders,” the filing said.

The deal’s success hinges on securing the votes of California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24.6% of Tribune Publishing. Soon-Shiong has not spoken publicly about Alden’s bid or his intentions. Soon-Shiong, who built his initial stake in Tribune Publishing at $15 per share in 2016, owns about 8.7 million shares of the company.

Through a spokeswoman, Soon-Shiong declined to comment Tuesday evening.

The SEC filing also revealed that there have been other bidders in the mix.

On Jan. 13, an unidentified bidder submitted a nonbinding proposal to buy Tribune Publishing for $15 a share, subsequent to Alden’s initial $14.25 per share bid for the company in December. The special committee went back to Alden with an $18.25 per share counter proposal in the wake of the third-party bid, according to the filing.

Tribune Publishing’s investment adviser, Lazard, subsequently determined that there was “a gap in equity financing” for the $15 per share third-party bid.

On March 10, Tribune Publishing received an offer from another unidentified bidder to buy the Morning Call Media Group for between $30 million and $40 million, according to the filing. Tribune Publishing said it is restricted by the merger agreement from “pursuing these indications of interest,” and referred the inquiry to Alden.