Mexican billionaire saves NYTimes

Bambi Francisco Roizen · January 20, 2009 · Short URL: https://vator.tv/n/659

Publisher gets $250 mln in a loan that could make Carlos Slim the largest stakeholder

(Updated to reflect the deal)

The cash-strapped New York Times Company inked a deal with Mexican billionaire Carlos Slim Helu.

As previously reported, Slim will loan $250 million to The New York Times Company.

The publisher has been exploring options to help its struggling operations amid declining advertising sales. 

Clearly it managed to strike a deal that potentially leaves its lender with the largest stake in the company, but with no voting rights or board seat.

If a deal goes through, Slim, ranked the second richest man in the world by Forbes with an estimated fortune of $60 billion, could end up the largest stakeholder in the publisher.

As part of the deal, Slim will receive unsecured notes.

"The notes have a coupon of 14.053 percent, of which the Company may elect to pay 3 percent in kind. The notes are callable beginning three years from the issue date at 105 percent of par, with subsequent call prices declining ratably to par," according to the release. The full release is below.

Banco Inbursa and Inmobiliaria Carso also received detachable warrants for an aggregate amount of 15.9 million Class A shares (50 percent each), at a strike price of $6.3572. The warrants expire in January 2015.
Slim and his family are the main shareholders in Banco Inbursa and Inmobiliaria Carso, the two entities Slim is doing the financing through.

Once Slim excercises his shares, his holdings would exceed that of the Sulzbergers, who have super-voting rights, but have a 19% stake. 

Here's the release:

The New York Times Company Enters into Agreement with Banco Inbursa and Inmobiliaria Carso for $250 Million in Senior Unsecured Notes

NEW YORK--(BUSINESS WIRE)--Jan. 19, 2009--The New York Times Company today announced that it had entered into a private financing agreement with Banco Inbursa, S. A., Institucion de Banca Multiple, Grupo Financiero Inbursa ("Banco Inbursa") and Inmobiliaria Carso for an aggregate amount of $250 million ($125 million each) in senior unsecured notes due 2015 with detachable warrants. The notes will rank equally and ratably on a senior unsecured basis with all senior unsecured obligations of The New York Times Company.

"This agreement provides us with increased financial flexibility to continue to execute on our long-term strategy," said Janet L. Robinson, president and CEO. "The proceeds from this transaction will be used to refinance existing debt, including amounts currently borrowed under a revolving credit facility that matures in May 2009. We continue to explore other financing initiatives and are focused on reducing our total debt through the cash we generate from our businesses and the decisive steps we have taken to reduce costs, lower capital spending, decrease our dividend and rebalance our portfolio of assets."

"We are very pleased to expand our strong relationship with The New York Times Company," said Arturo Elias, director of Inmobiliaria Carso. "We believe that with the strength of The New York Times brand, its national and international reach, its potential for digital expansion and most of all, its world-class news and information, the Company will continue to be a leader in the media industry."

The notes have a coupon of 14.053 percent, of which the Company may elect to pay 3 percent in kind. The notes are callable beginning three years from the issue date at 105 percent of par, with subsequent call prices declining ratably to par.

Banco Inbursa and Inmobiliaria Carso also received detachable warrants for an aggregate amount of 15.9 million Class A shares (50 percent each), at a strike price of $6.3572. The warrants expire in January 2015.

Mr. Carlos Slim Helu and members of his family are the main shareholders of Grupo Financiero Inbursa, S.A B. de C.V., which is the parent company of Banco Inbursa, and are the owners of Inmobiliaria Carso, which currently holds 6.9 percent of the Times Company's Class A shares.

SunTrust Robinson Humphrey, Inc. was the sole placement agent for this transaction, and Goldman Sachs advised the Company. 


 

(Image source: mysharetrading.com)

 
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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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