Zell could lose Tribune

Sam Zell could lose his stake in Tribune Co. as part of the reorganization being negotiated in bankruptcy court. Control of the company would instead be turned over to "senior lenders" - the banks and investors who hold $8.6 billion in Tribune Co. debt.

From the Chicago Tribune:

A source with knowledge of the situation said the plan would wipe out a $90 million warrant Zell negotiated as part of his $8.2 billion deal to take the company private in 2007. The warrant gives the Tribune Co. chairman the right to buy about 40 percent of the company for $500 million and is the basis of his control over Tribune Co., which owns the Chicago Tribune.

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Bankruptcy experts said the plan's outline raises questions about whether the senior lender group would want to retain Zell and his management team or seek new leadership for the company. It also poses the question of whether Zell would want to stay without a large ongoing stake in the company.

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"It completely depends on whether the new owners see value in keeping Zell," said Douglas Baird, a corporate reorganization specialist at the University of Chicago Law School. "They have to decide: Is the person at the helm when the company went into the storm the most able person to steer it out?"

(Chicago Tribune via Romenesko)