Sam Zell’s foray into newspapers might be coming to a close.
The billionaire real estate titan, who bought a controlling interest in Tribune Co. in 2007, could lose control of the newspaper company under a reorganization plan being negotiated between the company, which is in bankruptcy, and its lenders.
Tribune, which locally owns WPIX Channel 11, is in talks with a group of large banks including JPMorgan Chase and its distressed debt investors about a debt-for-equity swap that has the potential of Zell losing his grip on the company.
A lender involved in the negotiations said Tribune is in the very early stages of its discussions with its lenders.
Zell bought Tribune in a much-publicized 2007 buyout, but a souring advertising environment and a cumbersome $13 billion debt load forced the owner of the Los Angeles Times and Chicago Tribune to file for bankruptcy last December.
A Tribune spokesman said Sam Zell, as well as the rest of the management team, remained actively engaged and committed to the company.
“The restructuring is still in progress and it is premature to speculate about the final ownership structure,” he said.
Nevertheless, just the threat of Zell losing control of Tribune marks a stunning setback for the billionaire, who got even richer in 2007 when he managed to sell his Equity Office Properties commercial real estate business for $39 billion to The Blackstone Group.
Creditors in the coming months will see the beginning of a negotiated plan, the Tribune lender told The Post, adding that he has not yet seen a proposal and that there were many considerations that still needed to be addressed before one would be presented.
Zell owns a warrant giving him the right to buy 40 percent of the company for $500 million, which is how he exerts control.
Among the issues still to be worked out is what happens to the Tribune employees who own the company under an Employee Stock Ownership Plan. Because lenders holding $8.6 billion in debt will get paid before those in the ESOP, the value of their stake may be worthless.
Stephen Berman, a managing director at Corporate Solutions Group, which provides financial advice to employee-owned companies, said often when ESOP companies collapse, the buyers have little desire to maintain the ESOP structure. A buyer will typically pay the ESOP holders some cash for their stock so they can convert the firm back to a corporation.
While Zell is negotiating a plan, the bankruptcy court also will consider competing plans, so his may not end up being the final proposal.