| | |  Business News | January 2009 
Mexico's Slim to Invest $250 Million in N.Y. Times
 Robert Daniel - MarketWatch
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| | In this file photo, Carlos Slim speaks during a panel discussion at the Clinton Global Initiative Annual Meeting, Thursday, Sept. 27, 2007, in New York. The New York Times Co. says it has approved a $250 million investment by the Mexican telecommunications billionaire. (AP/Jason DeCrow) | |
New York Times Co. reached an agreement under which companies backed by the Mexican telecom investor Carlos Slim will invest $250 million and could boost their holding, helping the New York media company reduce its debt and strengthen its finances.
The move reflects the severe downturn in the media industry, stemming from the loss of advertising by print publications as more and more consumers glean their information from the Web.
And it comes as the Times has been moving to restructure its finances and strengthen and streamline its operations. The Wall Street Journal reported that the company had borrowed heavily when market conditions were better, and its debt will be coming due.
The company (NYT) has put its stake in New England Sports Ventures, the holding company for the Boston Red Sox and New England Sports Network, up for sale.
In a recent effort to boost revenue, New York Times publications began accepting ads on their front pages.
And on Thursday, the Boston Globe, which the Times owns, said that through buyouts and, if necessary, dismissals, it would cut 50, or 12%, of the staffers in its newsroom.
The companies controlled by the Mexican telecommunications investor agreed to buy $250 million of senior unsecured notes due 2015.
Warrants attached to the notes could enable Slim to boost his stake in New York Times Class A shares to 18% from 6.9%, The Journal reported. The Sulzberger family controls New York Times through a series of super-voting shares.
President and Chief Executive Janet L. Robinson said in the company's statement that New York Times would use the funds to refinance its existing debt, including a revolving-credit line that matures in May. The company is seeking other financing initiatives to reduce debt with cash generated from operations and saved via cost controls, she said.
In December Robinson had said that the company expected the declines in classified help-wanted, real estate and automotive advertising that have severely damaged the newspaper industry to continue in 2009. This year will be "among the most challenging" New York Times has ever faced, the executive said then at a UBS conference.
The investor is doing the deal through Banco Inbursa and Inmobiliaria Carso, companies that he and his family control. Slim owns Telefonos de Mexico, formerly the country's phone monopoly, and America Movil SA, Latin America's largest cellular provider measured by subscribers.
The notes have what the Journal called a relatively rich coupon of 14.053%, of which New York Times Co. may pay 3% in the same notes. The strike price is $6.3572; the warrants expire in January 2015. New York Times shares closed on Monday at $6.41.
SunTrust Robinson Humphrey was the placement agent for the deal and Goldman Sachs advised New York Times Co.
Robert Daniel is MarketWatch's Middle East bureau chief, based in Tel Aviv. |
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