Kein Wunder das einige in heller Aufregung sind....... SCHADENFREUDE!
July 20 (Bloomberg) -- Tribune Co. has a 50-50 chance of missing interest payments on some of the $13 billion in debt it will have after real estate investor Sam Zell buys the company, trading in the company's credit-default swaps shows.
Prices of the swaps, financial contracts used to speculate on a company's ability to repay debt, have jumped $331,000 since the first step in the sale was completed in May. It costs $770,000 to protect $10 million of Tribune bonds for five years, according to CMA Datavision, indicating a more than 50 percent risk of default. That's up from 32 percent on May 24, based on a JPMorgan Chase & Co. pricing model.
Investor unease is being fed by a deepening advertising slump at Tribune, owner of 11 metropolitan newspapers including the Los Angeles Times. That newspaper had ``one of the worst quarters ever experienced,'' in the second quarter and Tribune publishing results generally were ``worse than the industry,'' Publisher David Hiller wrote in a July 13 memo.
``If you were unsure about a deal before, it's much worse now,'' said Dave Novosel, an analyst at Gimme Credit Publications Inc. in Chicago who rates Tribune bonds ``sell.''
Tribune revenue fell 11 percent in May, the company said June 20, and was down 5.6 percent for the year to $2.02 billion. The company reports second-quarter results on July 25.
Tribune swaps prices imply investors consider the company the fourth-riskiest debt issuer among the almost 1,200 worldwide whose credit-default swaps were quoted this week by London-based CMA.
``Their capacity to service their obligations could certainly be at risk,'' said Mike Simonton, a credit analyst at Fitch Ratings in Chicago
Tribune has said in filings it will slash capital spending, eliminate dividends and use an employee-ownership structure to avoid taxes, conserving cash to make interest payments that New York-based Benchmark Co. analyst Edward Atorino estimated at $1.08 billion.
The company will earn $1.09 billion to $1.18 billion before interest, taxes, depreciation and amortization this year, estimates Deutsche Bank newspaper analyst Paul Ginocchio in New York. While the deal is ``more likely than not'' to be completed, ``there may be some unhappy lenders in the end,'' he wrote in a July 1 report. .... On May 24, Tribune bought back 126 million shares, using more than $4 billion borrowed from four banks, including Citigroup Inc. and JPMorgan Chase. Tribune plans to borrow another $4.2 billion by year-end to buy its remaining stock.
> I would like to hear what the bondholders are saying to the buybacks.......