Bloomberg- Sam Zell’s agreement to buy Tribune Co., the publisher of the Los Angeles Times and owner of the Chicago Cubs, prompted three hedge funds to seek profits in the fine print of $1.26 billion of bonds.
It’s a tactic bondholders have successfully used before. Blackstone Group LP paid $953 million to redeem debt earlier this year, $127 million more than it first offered, after getting attacked by investors in the $20 billion leveraged buyout of Equity Office Properties Trust. American International Group Inc. is leading an effort to squeeze Tyco International Ltd. for an additional $95 million before approving its breakup plan.
Tribune received a notice of default from Andrews Kurth LLP, the law firm representing funds that hold 55 percent of a $1.26 billion bond issue, according to a June 1 filing with the U.S. Securities and Exchange Commission. The funds, which aren’t identified in the filing, say Zell’s plan to sell the Cubs baseball team violates terms under which the Chicago-based company’s debt was sold, and they want to be repaid immediately.
