There was a time, in 2007 and '08, when you couldn't escape the name Sam Zell, the billionaire who, in December 2007, bought media giant Tribune Company ... and then swiftly brought it to its knees by taking it into Chapter 11. The reason for the bankruptcy: The parent company of, among others, the Chicago Tribune and Los Angeles Times and WGN, was already more than $5 billion in debt when Zell borrowed another $8 billion to buy out shareholders and take the publicly owned company private. By December 2008, reported the Washington Post, the company had $12.9 billion in debt and $7.6 billion in assets.
The whole sordid story is recapped in the lengthy lawsuit filed yesterday in Dallas federal court, where creditors and note holders, chief among them a Deutsche Bank subsidiary, sued former shareholders who benefited from the leveraged buyout -- including the Employees' Retirement Fund of the City of Dallas and other locals. Says the suit, the leveraged buyout "lined the pockets of Tribune's former shareholders with $8.5 billion of cash at the expense of Tribune's creditors, and precipitated Tribune's careen into bankruptcy shortly thereafter." And now the plaintiffs want their money back.
The suit doesn't say how much the city's $3.1-billion civilian retirement fund made when its sold off its stock in '07 (for $34 a share); all that info's been redacted, per a previous agreement with the court. And there's no mention of the Tribune Company in any of the financial reports available online, dating back to December 2007. A message was left with Keefe M. Bernstein, the Akin Gump Strauss Hauer & Feld attorney repping the plaintiffs.
Reuters notes that this is one of two creditors suits filed yesterday; the other was in Philadelphia. And maybe you recall: Just last October, then-Mayor Tom Leppert called for a review of the ERF and the Dallas Police and Fire Pension System, only to be told a month later that "the systems are financially sound for now," as Rudy wrote.
Keep the Dallas Observer Free... Since we started the Dallas Observer, it has been defined as the free, independent voice of Dallas, and we would like to keep it that way. Offering our readers free access to incisive coverage of local news, food and culture. Producing stories on everything from political scandals to the hottest new bands, with gutsy reporting, stylish writing, and staffers who've won everything from the Society of Professional Journalists' Sigma Delta Chi feature-writing award to the Casey Medal for Meritorious Journalism. But with local journalism's existence under siege and advertising revenue setbacks having a larger impact, it is important now more than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" membership program, allowing us to keep covering Dallas with no paywalls.