Tribune reaches deal with key creditors

Settlement sets company up for exit from bankruptcy

NEW YORK -- Tribune Co. has reached a mediator-endorsed agreement with two big creditors -- Oaktree Capital Management and Angelo, Gordon & Co -- on a Chapter 11 reorganization plan that will settle claims surrounding the media company's 2007 going-private deal.

The settlement, which sets the company up for its exit from Chapter 11 bankruptcy after nearly two years, comes as a result of court-ordered mediation and has been approved by the special committee of Tribune's board.

The company, which owns the L.A. Times, Chicago Tribune and various broadcast assets, among others, announced the breakthrough on Tuesday. Under the plan's terms, the equity of the reorganized firm will be distributed to the holders of term loan claims, said Don Liebentritt, Tribune's chief restructuring officer.

A litigation trust will allow legal action related to remaining legal issues alleged by unsecured creditors to be pursued without hurting the firm's business operations.

The settlement provides for Tribune's senior bondholders to receive $300 million (approximately 23% of their claim amount) in cash plus their interest in the litigation trust.