George S. May Business Blog

Billionaire may save drowning NY Times

According to the NY Times, their company is close to inking a deal with billionaire Carlos Slim Helu that would allow them to receive a $250 million dollar investment to cover debt payments. The company’s board is expected to meet today to approve the deal, with an announcement possible as early as Tuesday, the newspaper reported. The Times said Slim’s investment in the company would be in the form of 10-year bonds with warrants convertible to common shares. Slim also would receive a special dividend up to or exceeding 10 percent of his investment. He would get no representation, however, on the company’s board or special voting rights. But when he exercises the warrants, he would own about one-third of the company’s common stock, becoming its largest shareholder, according to the Times.

If a deal is worked out between the two, the money could not have come at a better time as it is reported that the times have a $1.1 billion debt and $400 million loan that expires in May.

This won’t be the first time that Slim has invested in the company. In September, Slim and a few family members bought up 6.4 percent of the companies stock. The Times said the value of Slim’s investment has since fallen to $58 million from $128 million.

In the Times’ defense, the company has been trying to conserve cash. In November it slashed its quarterly dividend by 74 percent. It also has plans to raise $225 million from its new, 52-story Manhattan headquarters, either by selling the building and leasing it back or a mortgage. The company owns 58 percent of the building, a portion that has not yet been mortgaged.

This marks another of so many newspapers that have struggled over this past year to stay afloat. The speed, accessibility, and price of information on the internet has been forcing newspaper companies into deep debt that most have been unable to rebound from. In the coming years it will be imperative that these companies restructure and refocus on ways to compete, otherwise they will all eventually go broke and disappear.

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