Tribune Faces U.S. Labor Department Probe & Tribune Stock Plan Draws U.S. Subpoena

[Omaha Steve]

http://broadcastunionnews.blogspot.com/2009/04/tribune-faces-us-labor-department-probe.html

Saturday, April 11, 2009
Tribune Faces U.S. Labor Department Probe
By CYNTHIA LITTLETON
Variety

Feds scrutinizing employee ownership plan

Tribune Co. is now facing more scrutiny from the feds, this time for the complex employee stock ownership plan that was the key to financing Sam Zell's 2007 takeover of the newspaper and TV station owner.

Tribune disclosed on Thursday that it received a subpoena for "an extensive range of documents" as part of a Labor Department investigation of the employee stock ownership plan (ESOP) that facilitated Zell's $8.2 billion buyout of the Chicago-based media company.

Tribune disclosed the investigation as part of its regular filings in connection with the $13 billion Chapter 11 bankruptcy proceeding that it initiated in December. In asking the bankruptcy judge to approve additional payments to a law firm in connection with the Labor Dept. investigation, Tribune disclosed in the Thursday filing that it received the subpoena on March 2, and delivered a raft of documents to the feds on March 31.

"We view this as a routine inquiry," Tribune spokesman Gary Weitman said in a statement, according to the Associated Press.

The fate of the ESOP has been one of the primary questions hanging over Tribune as it struggles to reorganize its considerable debt at a highly inopportune moment, given the seizure of the credit markets during the past nine months.

Zell's buyout of Chicago's stalwart media firm was predicated on the ESOP structure allowing the company to save as much as $1 billion a year in tax payments, as employee-owned firms are largely exempt from federal tax obligations.


FULL story & Tribune Stock Plan Draws U.S. Subpoena at link.