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Tribune to Repurchase up to 75 Million
Common Shares
Represents 25%
of Shares Outstanding; Value of More Than $2 Billion
Modified “Dutch
Auction” Tender Offer Commences
Today
Company
Targets $500 Million in Asset Sales, $200 Million in
Cost Savings
Will Continue to Invest and Innovate for Top-Line Growth
CHICAGO, May 30, 2006 -- Tribune
Company (NYSE: TRB) today announced that its Board of Directors
has authorized the repurchase of up to 53 million shares
of its common stock in a modified "Dutch Auction" tender
offer, an additional 10 million shares from its principal
shareholder following completion of the tender offer and
up to an additional 12 million shares through open market
repurchases after the tender. In the tender offer, shareholders
will have the opportunity to tender some or all of their
shares at a price that is not greater than $32.50 and not
less than $28.00. The tender offer will commence today and
is expected to expire on June 26, 2006, unless extended.
The repurchase of up to 75 million shares of common stock
through these transactions represents about 25 percent of
the common shares outstanding with a total value of more
than $2 billion.
The stock repurchases will be funded
through a combination of bank debt and publicly issued
bonds. This incremental debt will be repaid from the significant
free cash flow generated by Tribune’s media businesses
and proceeds from at least $500 million in asset sales,
which could include certain non-core broadcasting and publishing
assets as well as real estate and securities held for investment.
The company expects that its current credit ratings will
be lowered as a result of the increased debt. The company
will maintain its current dividend and continue to fund
additional investments.
"These stock repurchases demonstrate
our confidence in the company and its future and represent
a very meaningful step in our commitment to enhance value
for shareholders," said
Dennis FitzSimons, Tribune chairman, president and chief
executive officer. "They also reflect our strong belief
that Tribune’s current share price does not adequately
reflect the fundamental value and long-term earnings prospects
of the company’s businesses."
"The repurchase transactions are expected
to be accretive to earnings per share and will lower Tribune’s
cost of capital," added FitzSimons. "They also
allow us to optimize our capital structure while maintaining
financial flexibility. We intend to achieve our goal of generating
additional shareholder value through improved operating performance,
asset dispositions and the disciplined repayment of debt
over the next several years."
Strategic Initiatives
Tribune management reiterated its growth plans for the
company’s
major market media businesses.
The publishing and interactive strategy
calls for a combination of revenue growth -- primarily
driven by interactive -- and
structural cost savings over the next two years. Specific
growth strategies include:
- Expand existing interactive businesses and invest
in building national interactive networks.
- Sustain the broad reach and revenue
of Tribune’s
market-leading metropolitan newspapers through editorial,
sales and marketing innovation.
- Grow targeted
print and direct mail businesses.
- Aggressively
manage costs to best serve customer needs and take full
advantage of scale.
The broadcasting strategy calls for utilizing the scale
of our television group to maximize audience share and cash
flow through the following initiatives:
- Acquire quality off-network programming to generate
large audiences for advertisers in our local markets.
- Complement our stations’ strong
broadcast network affiliations (The CW, FOX, MyNetworkTV
and ABC) with a focus on local news and sports.
- Align with major program suppliers to
co-develop quality first-run programming for key audience dayparts.
- Create additional value via cable/satellite television
(Superstation WGN) and through the use of our digital spectrum.
- Continue
to use technology to increase efficiency and reduce costs.
Across the company, $200 million in additional cost savings
from existing operations are planned over the next two
years to offset expense inflation. Investments in common
systems for advertising, circulation, content and interactive
capabilities will improve efficiency, as will greater collaboration
across business units, outsourcing and local initiatives.
Overall, resources will be redeployed to support key growth
opportunities, particularly in interactive businesses.
"Tribune Company remains committed to
delivering long-term shareholder value by improving the operating
performance of our major market media businesses," said FitzSimons.
"We have an outstanding group of major market media assets
capable of producing top-line growth by providing excellent
service to our customers and communities."
Tender Offer and Other Share Repurchases
In the tender offer, shareholders will
have the opportunity to tender some or all of their shares
at a price that is not greater than $32.50 and not less
than $28.00. Based on the number of shares tendered and
the prices specified by the tendering shareholders, Tribune
will determine the lowest per share price within the range
that will enable it to buy 53 million shares, or such lesser
number of shares as are properly tendered. If fewer shares
are properly tendered, the company will purchase all shares
that are properly tendered and not properly withdrawn.
If more than 53 million shares are tendered, the company
will purchase all shares tendered at or below the purchase
price selected in the tender offer on a pro rata basis,
except for "odd lots" (lots
held by owners of less than 100 shares), which will not be
prorated. All shares acquired in the tender offer will be
acquired at the same price, including shares that were tendered
at a lower price. Shareholders whose shares are purchased
in the offer will be paid the purchase price in cash, without
interest, promptly after the expiration of the offer period.
McCormick Tribune Foundation and Cantigny Foundation, affiliated
nonprofit organizations which together hold 13.6% of Tribune’s
outstanding shares, have agreed to sell to the company a
total of 10 million shares, subject to adjustment depending
on the number of shares tendered, and contingent on the company
purchasing at least 30 million shares in the tender offer.
Purchases from these foundations will be made on the 11th
business day following the expiration of the offer period
at a price equal to the per share price the company pays
for shares purchased in the tender offer.
Following the completion of the tender offer, the company
may also purchase up to an additional 12 million shares through
open market purchases. These open market purchases may not
begin until the 11th business day following the expiration
of the offer period.
The tender offer is not contingent upon
any minimum number of shares being tendered. The tender
offer is subject, however, to certain conditions as specified
in the Offer to Purchase, including obtaining the necessary
financing for the tender offer from credit facilities arranged
by Merrill Lynch Capital Corporation and Citigroup Global
Markets Inc., the lead financial advisors on the transaction.
The credit facilities will be used to fund the tender offer,
the principal shareholder stock purchases and the post-tender
offer open market stock purchases, to refinance outstanding
commercial paper and other near-term debt maturities and
to replace Tribune’s
existing revolving bank credit agreements.
Merrill Lynch & Co. and Citigroup
will serve as Co-Dealer Managers for the tender offer.
Georgeson Shareholder Communications Inc. will serve as
Information Agent and Computershare Trust Company, N.A.
will serve as the Depositary. The Offer to Purchase, Letter
of Transmittal and related documents will be mailed to
shareholders of record and will also be made available
for distribution to beneficial owners of Tribune common
stock.
DETAILS OF CONFERENCE CALL
Today at 8 a.m. CT, management
will host a conference call to discuss this announcement.
To access the call, dial 800/510-9691 (domestic) or 617/614-3453
(international) at least 10 minutes prior to the scheduled
8 a.m. start. The participant access code is 45686894. Replays
of the conference call will be available May 30 through June
30. To hear the replay, dial 888/286-8010 (domestic) or 617/801-6888
(international) and use access code 10182055. A live webcast
will be accessible through www.tribune.com and www.earnings.com.
An archive of the webcast will be available May 30 through
June 30.
More information about Tribune is available at www.tribune.com or by calling 800/757-1694.
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TRIBUNE (NYSE:TRB) is
one of the country’s
top media companies, operating businesses in publishing and
broadcasting. It reaches more than 80 percent of U.S. households
and is the only media organization with newspapers, television
stations and websites in the nation’s top three markets.
In publishing, Tribune operates 11 leading daily newspapers
including the Los Angeles Times, Chicago Tribune and Newsday,
plus a wide range of targeted publications. The company’s
broadcasting group operates 26 television stations, Superstation
WGN on national cable, Chicago’s WGN-AM and the Chicago
Cubs baseball team. Popular news and information websites
complement Tribune’s print and broadcast properties
and extend the company’s nationwide audience.
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This press release contains certain
comments or forward-looking statements that are based largely
on the Company’s
current expectations and are subject to certain risks, trends
and uncertainties. Such comments and statements should be
understood in the context of Tribune’s publicly available
reports filed with the Securities and Exchange Commission,
including the most current annual 10-K report and quarterly
10-Q report, which contain a discussion of various factors
that may affect the Company’s business or financial
results. These factors, including the ability to complete
the tender offer and the ability to achieve cost savings,
could cause actual future performance to differ materially
from current expectations. Tribune is not responsible for
updating the information contained in this press release
beyond the published date, or for changes made to this document
by wire services or Internet service providers. The Company's
next 10-Q report to be filed with the Commission may contain
updates to the information included in this release.
This press release is for informational
purpose only and is not an offer to buy or the solicitation
of an offer to sell any shares of the Company’s common stock. The
solicitation of offers to buy Tribune Company’s common
stock will only be made pursuant to the Offer to Purchase
and related materials that the Company is sending to its
shareholders. Shareholders should read those materials carefully
because they will contain important information, including
the various terms and conditions of the offer. Shareholders
will be able to obtain copies of the Offer to Purchase, related
materials filed by the Company as part of the statement on
Schedule TO and other documents filed with the Securities
and Exchange Commission through the Commission’s internet
address at http://www.sec.gov without charge. Shareholders
will also be able to obtain copies of the Offer to Purchase
and related materials, as filed with the Commission (excluding
exhibits), without charge from the Company or by written
or oral request directed to the Information Agent, Georgeson
Shareholder Communications Inc., 17 State Street, 10th Floor,
New York, New York 10004, telephone number 1 (866) 767-8963
(banker and brokerage firms call collect (212) 440-9800). |
