Activist Hedge Funds Buying Newspaper Industry Debt
Monday, June 7, 2010 : PermalinkNew York (HedgeCo.net) – The Los Angeles Times reports that hedge funds and banks are taking over some of the major US newspapers as they begin to emerge from bankruptcy protection.
“Distressed debt” hedge funds such as Angelo, Gordon & Co., Alden Global Capital and Oaktree Capital Management, have been buying up cheap, delinquent debt, then taking it to bankruptcy court for a settlement that transforms the debt into a large share of company stock, the LA Times reported, with itself, Tribune Co., being one of the newspapers under siege along with KTLA-TV Channel 5, among others.
The hedge funds, such as Angelo, Gordon & Co., as well as JPMorgan will eventually become major shareholders in both Tribune and Freedom, the LA Times reported. People with knowledge of the the hedge funds’ strategy, say that the hedge funds want quality, branded journalism that still draws advertisers and therefore is worth saving.
“The hedge funds will have to remain patient if they want to reap what they’ve sown in newspapers,” the LA Times quoted. “The funds probably don’t even have a firm exit strategy in place.”
Analysts believe, the LA Times said, that the newspaper industry had gotten so beaten down during the crisis that they have become a bargain for hedge funds.
Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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