On the heels of announcing steep layoffs at the Los Angeles Times, Tribune Co. said Thursday it had arranged a $300 million bank loan with Barclays Bank, most of which would be used to pay off part of an existing loan.
The Barclays transaction was described as an “asset-backed commercial paper facility,” meaning it’s backed by accounts receivable money that Tribune is owed.
The arrangement with Barclays allows Tribune to get a cash infusion pronto without having to wait for those bills to come due. Still, it’s a sign of the cash crunch at the debt-laden Chicago-based newspaper and TV station owner. The L.A. Times jolted the media biz last Wednesday in confirming that the newspaper would shed 250 jobs, 150 of them in the newsroom, and reduce the size of the paper by 15% as a result of the weak California economy and plunging ad revenue. (Daily Variety, July 3).
Tribune said it would use about $225 million of the Barclays loan to pay off part of one of its existing loans that has a balance of $1.4 billion and is due to be repaid in full by June 2009. According to Tribune’s first-quarter filing with the Securities and Exchange Commission, $650 million of that loan is due to be repaid in early December.
The buyout of Tribune last December by real estate mogul Sam Zell under an employee-ownership structure left the company with more than $12 billion in debt.