Cuban's SEC suit may cut price for Cubs, analyst says

Tribune Co. may get less from the sale of the Chicago Cubs after U.S. regulators sued bidder Mark Cuban for insider trading this week, according to a credit analyst.

Cuban is among the initial bidders for the Major League Baseball team, its Wrigley Field home and a stake in a television network. The Securities and Exchange Commission claims the billionaire owner of the Dallas Mavericks basketball team made improper trades in shares of Mamma.com Inc. four years ago. Cuban denies the allegations.

League owners must approve a sale, and the SEC's claim against Cuban ``throws into question'' whether they would vote in his favor, Gimme Credit analyst Dave Novosel wrote in a report today. Without Cuban, bids may be lower, Novosel said. His absence might also increase the chance Tribune will keep a 50 percent stake in the team

Tribune, the newspaper publisher and broadcaster owned by Sam Zell and loaded with $11.8 billion in debt, is selling assets to help meet its obligations and avoid breaching loan covenants as advertising sales plummet. Novosel said his initial estimate that the Cubs would bring in about $1 billion was already eclipsed by the credit crisis. The lack of available funding may eliminate buyers for other assets as well, he wrote.

The Chicago-based company, which billionaire Zell took private last December, is ``perilously close to covenant violations'' as cash flow dwindles, said Novosel, who recommends selling the 2015 bonds.

Tribune's 5.25 percent notes due in 2015 traded yesterday at 9.875 cents on the dollar to yield 65.8 percent, according to Trace, the bond-trading service of the Financial Industry Regulatory Authority.