Tribune bankruptcy plan labeled 'unfair'

Lenders urge court to propose alternative, reject extension

NEW YORK -- A group of Tribune Co. lenders on Monday labeled the U.S. newspaper publisher's proposed plan to exit bankruptcy "unfair" and said they deserve the right to propose an alternative.

In a filing in the U.S. bankruptcy court in Wilmington, Delaware, two dozen lenders holding more than $3.6 billion of claims said it was "premature and misleading" for Tribune to announce on April 8 a settlement with creditors to help it emerge from Chapter 11 protection this year.

Calling the accord "dead on arrival" without their support, the lenders asked U.S. Bankruptcy Judge Kevin Carey to propose a "fairer and less rank" alternative that does not award other creditors at least $400 million of value at their expense.

They also urged the judge to reject Tribune's effort to extend through April 30 its "exclusive" period to file a reorganization plan without creditor interference.

Tribune spokesman Gary Weitman declined to comment. The company is expected to file its proposed reorganization plan this week.

The unhappy lending group includes hedge funds that say they hold 42% of the $8.7 billion claims under a 2007 secured credit agreement. Its members include Goldman Sachs Loan Partners and Oaktree Capital Management LP, among others.

Tribune owns the Chicago Tribune, the Los Angeles Times and other publications, as well as some television stations. It sold the Chicago Cubs baseball team earlier this year.

The Chicago-based company 8 announced an agreement on April purporting to settle potential claims arising from its $8.2 billion leveraged buyout in 2007, which was led by real estate developer Sam Zell and left Tribune with too much debt.

Senior credit facility lenders would control 91% of stock in a reorganized company, whose value is estimated at $6.1 billion.

The dissenting lending group said the agreement is "impossibly tainted" by Tribune's attempt to give a "free pass" to insiders, including Zell, executives and large creditors, including JPMorgan Chase & Co and bondholder Centerbridge Capital Advisors.

"This is a 'settlement' made possible with 'other people's money' -- specifically, that of the credit agreement lenders and other current holders of credit agreement claims left holding the bag," the lending group said.

An official committee of unsecured creditors also supports Tribune's agreement, while some junior bondholders oppose it.

JPMorgan spokesman Justin Perras declined to comment. Centerbridge did not return a request for comment.

The lending group separately asked Carey to order Centerbridge to produce a variety of documents.

Tribune filed for bankruptcy protection on December 8, 2008.
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