New York Times Gets $250 Million From Slim

Updated from 12 a.m. EST

NEW YORK -- New York Times (NYT) says it has approved a $250 million investment by Mexican telecommunications billionaire Carlos Slim Helu.

The financing agreement is with Slim's companies Banco Inbursa and Inmobiliaria Carso for $125 million each.

Times has been struggling with faltering advertising sales and faces deadlines to repay hundreds of millions of dollars in debt.

Times President Janet L. Robinson says the cash infusion will be used to refinance existing debt, including some borrowed under a revolving credit line that matures in May. She says Monday's agreement provides the company with increased financial flexibility.

In September, Slim and his family bought 6.4% of the Times' publicly traded shares. The Times said the value of Slim's investment has since fallen to $58 million from $128 million.

The Times, which also publishes the Boston Globe and International Herald Tribune, has been trying to conserve cash as advertising revenue continues to slide. Newspaper publishers across the country are hurting amid the economic downturn and as advertisers shift spending online. The Times slashed its quarterly dividend by 74% in November and plans to raise $225 million from its new, 52-story Manhattan headquarters, either by selling the building and leasing it back or borrowing against it. It also put its stake in the Boston Red Sox up for sale.

The Times reported that Slim would buy six-year notes in the company with warrants that are convertible to common shares. The notes carry a 14% interest rate, with 11% paid in cash and 3% in additional bonds, the newspaper reported.

Those terms could be similar to those insisted upon by Warren Buffett, when he invested billions in Goldman Sachs (GS) and General Electric (GE), with the promise of 10% annual dividends.

Slim would get no representation on the Times' board, and no special voting rights. But when he exercises the warrants, he would own up to 17% of the company's common stock, becoming its largest shareholder, the Times reported. The Ochs-Sulzberger family owns about 19% of the company but controls it through a special class of supervoting shares.

The Times Co. reported having about $46 million in cash and $1.1 billion in debt in September. A $400 million loan expires in May.

Shares of the company closed Friday up 23 cents at $6.41.

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