Tribune Expecting $325m Dividend From Publishing Spinoff?

Tribune’s (TRBAA) upcoming publishing spinoff is on track to be completed later this year and as part of the transaction, the new company will issue new debt in order to fund a dividend to the parent company. While not an uncommon feature of spinoff transactions, the move is drawing a lot of negative attention from news outlets and is even facing questioning from California Rep. Henry Waxman. One of the big questions is how large will the new company’s debt load be?

While this information is typically unveiled in an amended Form 10 or via press release, the LA Times and others seem to have found the answer contained within data Tribune provided to lenders for its recent TV station transaction. Apparently, the magic number is expected to be ~$325m, which is the amount by which Tribune claimed it would reduce its debt load as a result of the spinoff transaction. Not surprisingly, the company would not confirm that figure.

Additionally, as part of the spinoff, the new company will engage in a little ‘off-balance’ sheet financing by leasing its facilities from the parent company instead of continuing to own its real estate. Of course, that also means shelling out cash for lease expenditures. Joe Cahill at Crain’s Chicago notes some other troublesome changes for the new company, including a possible renegotiation of its revenue share deal with

As of the initial Form 10 filing, the company only had ~$9.5m of cash on the balance sheet, but without the final docs it’s really not worth guessing at what the ultimate cap structure will be as numerous things can change in the meantime. The parent company could provide a cash infusion, raise or lower the $325m figure, the new company might issue additional debt for operations and so on and so forth. That information will eventually be released and there should be plenty of time to analyze the numbers and figure out what kind of ‘shape’ the new company will be in. Odds are it won’t be pretty though.

Disclosure: Author holds no position in any stock mentioned.