The Tribune Companies, which moved its annual meeting to Tribune Tower to save money, launched a series of financial initiatives today including cost-cutting, non-core asset sales and a massive stock buy back. The company:
– will buy back 25 percent of its stock for an estimated $2 billion-plus in a modified Dutch auctionb starting today; price range $28-$32.50.
– will fund the buyback in part by 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.”
– will wring another $200 million in “cost savings” from existing properties over the two years.
The press release reiterates plans to “expand existing interactive businesses and invest in building national interactive networks.”
An interesting side note: Tribune has agreed to buy back 10 million shares from the non-profit McCormick Tribune Foundation and Cantigny Foundation subject to various contingencies. Tribune chairman and CEO Dennis FitzSimons also heads McCormick.
AP: Tribune stock has lost nearly half its value since 2004. Initial response sent the stock up $2.04; the 7.3 percent increase was the largest single-day lift in six years. Deutsche Bank analyst Paul Ginocchio: “We applaud Tribune for making a significant move to improve its capital structure and working to create shareholder value. … Unfortunately this does not change the significant structural headwinds” that the company faces. He beileves the company will keep the Cubs but sell the Tribune Tower.
Update: Tribune closed up at $2.01, or 7.2 percent,