Tribune says fight with some creditors, banks settled

CHICAGO -- Tribune Co., the biggest U.S. media company in bankruptcy, said Tuesday it settled a dispute between unsecured creditors and senior lenders by offering the bondholders $420 million.

The payment represents almost 33 percent of what they are owed, the publisher of the Chicago Tribune and Los Angeles Times said today in a statement. In return, the unsecured creditors will drop claims against the lenders who financed Tribune's 2007 leveraged buyout, Tribune said.

Tribune said the settlement makes the unsecured creditors party to Tribune's deal with hedge funds Angelo Gordon & Co. and Oaktree Capital Management LP, which hold some of the buyout loans. Tribune is trying to negotiate an end to disputes among its creditors, who disagree on how to divide ownership of the Chicago-based publisher once it exits bankruptcy.

“The additional value being allocated to our bondholders and other unsecured creditors represents a fair and equitable settlement for all of our constituencies, Don Liebentritt, Tribune's chief restructuring officer, said in the statement.

The banks that arranged the buyout loans have agreed to provide $120 million in cash as part of the payment to the unsecured creditors.

Howard Seife, the lead attorney for the committee of unsecured creditors, said in a telephone interview that a majority of the committee supports the agreement. He wouldn't offer further comment.

Some lower-ranking creditors have said they want to sue the lenders behind the buyout to strip of them of their first-to-be- paid status.