Tribune hires firm to look at Ch 11 filing: source

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By Jui Chakravorty

NEW YORK (Reuters) - Tribune Co has hired investment bank Lazard to look at a possible bankruptcy filing even as the publisher and broadcaster talks with lenders to renegotiate its debt, a source briefed on the matter said on Monday.

The privately held publisher of the Chicago Tribune and Los Angeles Times, which took on about $13 billion of debt when it went private last year under a deal led by real estate mogul Sam Zell, has also hired a legal counsel for a possible trip through bankruptcy court, newspaper websites reported on Sunday.

A second source familiar with the situation said Tribune was considering a bankruptcy filing.

A Tribune Co representative could not immediately be reached for comment.

Lazard did not respond to several requests for comment, but Gary Weitman, a Tribune Co spokesman, was quoted as saying in Monday's Chicago Tribune that the company had yet to make any decision.

"We're looking at all of our options," he told the Tribune.

A restructuring outside of bankruptcy court remains an option for Tribune as talks with creditors continue, the first source told Reuters, asking not to be named because of the confidential nature of the talks.

Tribune is trying to sell off properties such as the Chicago Cubs baseball team to pay off debt. It already sold the Newsday newspaper on Long Island, New York, to Cablevision Systems Corp.

During the third quarter, Tribune also sold a 10 percent interest in online job site CareerBuilder to Gannett Co Inc for $135 million.

Analysts have said Tribune's biggest challenge is to avoid violating the lending terms, or "covenants," on what they estimate to be about $10 billion of guaranteed debt.

Analysts told Reuters last month that the company has to ensure its debt is not more than nine times the amount of earnings it brings in before interest, taxes, depreciation and amortization. If debt rises too high as income falls, the company could violate those lending terms.

The company's cash flow may be insufficient to cover nearly $1 billion in interest payments due this year, and Tribune owes a $512 million debt payment in June.

Tribune reported in November a third-quarter loss from continuing operations of $124 million, compared with a profit of $84 million in the same quarter a year ago.

Revenue fell 10 percent to $1 billion.

Tribune paid $888 million in debt in the third quarter, with $218 million coming from another credit line. For the balance, it used money from the Newsday and CareerBuilder deals.

(Additional reporting by Megan Davies; editing by Matthew Lewis)

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