New Look at Tribune

The publisher will buy back stock, take on debt and sell assets.
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Tribune

(TRB)

set a big financial restructuring Tuesday.

The newspaper chain said it will buy back up to $2 billion in stock in moves including a modified Dutch auction self-tender at $28 to $32.50 a share. Tribune will also divest itself of $500 million in unspecified noncore assets and cut $200 million worth of costs.

The company also agreed to settle a Securities and Exchange Commission enforcement action on the circulation-padding scandal at its

Newsday

and

Hoy

papers. Tribune denied wrongdoing and won't have to pay a fine, but a number of former execs including onetime

Hoy

publisher Louis Sito

pleaded guilty to mail fraud, the Justice Department said.

The Chicago-based owner of the

Los Angeles Times

and

Chicago Tribune

and the Chicago Cubs baseball team will buy back 53 million shares in the self-tender, plus 10 million shares from a principal shareholder and another 12 million shares through the open market after the tender.

The company has been hit by slow growth in the newspaper industry. Its shares rose 9% early Tuesday but remain more than 20% below their 52-week high.

"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 Dennis FitzSimons. "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 said it would take on debt to fund the buyback. Divestitures "could include certain noncore broadcasting and publishing assets as well as real estate and securities held for investment," Tribune said. "The company expects that its current credit ratings will be lowered as a result of the increased debt. The company will maintain its current dividend and continue to fund additional investments."

Tribune said it wants to expand existing interactive businesses and invest in building national interactive networks. It also seeks to sustain the broad reach and revenue of its market-leading metropolitan newspapers through editorial, sales and marketing innovation.

When asked about a possible sale of the Cubs on a conference call with investors, FitzSimons said the company's top assets, including the baseball team, are not up for sale.