The New York Times, scrambling to stay in business, has accepted a $250 million investment from Mexican billionaire Carlos Slim Helú: Under the terms of the deal, Mr. Slim, who already owns 6.9 percent of the Times Company, would invest $250 million in the form of six-year notes with warrants that are convertible into common shares, the company said in a statement. The notes also carry a 14 percent interest rate, with 11 percent paid in cash and 3 percent in additional bonds.
A reader who is an expert in corporate finance writes:
.....this is a CLASSIC instance of corporate desperation..."last chance finance"...richly deserved....
Apparently the New York Times Corp. has accepted an offer from Mexican billionaire Carlos Slim to put $250 million into the company. But, man...are the terms onerous!...It's a debenture carrying BOTH a 14% coupon --- junk bond territory ---- AND warrants for 18% of the company, the third largest share...exercisable at a DISCOUNT to Friday's closing price!!...the warrants are in the money NOW!....it gets worse...they cut their dividend in November by 75%...reducing the Sulzbergers' income dramatically...and the new $250 million probably isn't close to enough for their liquidity needs...so they will probably do a $225 million sale/leaseback of the Times office building!...in combination.....this is a CLASSIC instance of corporate desperation..."last chance finance"...richly deserved....
PAUL adds: John should be commended for not calling this post "Slim Pickings." I'm hardly an expert in corporate finance or the newspaper industry. But I know that the Times is a pillar of left-liberalism, so I'm skeptical that it will be permitted to disappear.
http://www.powerlineblog.com/archive.../01/022610.php
