Billionaire seeks deal in New York Times Co.
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Carlos Slim Helú, the Mexican billionaire, is near a deal to invest about $250 million in The New York Times Co., publisher of the International Herald Tribune, helping to shore up the publishing company's struggling finances, according to people briefed on the transaction.
The company's board is expected to meet Monday to approve the deal, these people said, and an announcement could be made as early as Tuesday. However, these people also warned that several details still needed to be completed and that it remained possible the agreement could collapse.
The deal would come as the Times Co. moves to raise money amid flagging advertising sales and approaching deadlines to pay back hundreds of millions of dollars of debt over the next two years. The company has put its stake in the Boston Red Sox up for sale and said last year that it would borrow as much as $225 million against its new headquarters in New York through a sale-leaseback agreement.
Under the terms of the deal, Slim, who already owns 6.4 percent of the Times Co., would invest $250 million in the form of 10-year notes with warrants that are convertible into common shares, these people said.
As part of Slim's investment, which resembles a loan, he is expected to get a special dividend, perhaps as high as 10 percent annually or more, these people said.
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Slim is not expected to get any representation on the company's board or any shares with super-voting rights like those of the Sulzberger family, which controls the company. Nonetheless, when Slim exercises the warrants, he would become the largest shareholder in the Times Co., owning about a third of the common stock.
The Sulzbergers own about 19 percent of company but control it with a special class of shares.
Slim, one of the wealthiest people in the world, controls cellular and landline phone companies and has major investments in retail, construction, banking, insurance, railroads and mining. In March, Forbes magazine estimated his fortune at $60 billion.
It is unclear what motivated Slim's investment, first reported by The Wall Street Journal over the weekend. He approached the Times Co. in November, people briefed on the discussions said, offering to make a sizeable investment. He never sought a governance role and did not express interest in influencing the company's operations, these people said. The talks were intended to be private.
Slim first invested $128 million in the Times Co. last September; that investment is now worth about $58 million as the company's shares have plunged.
At the time of his original investment, he described it as a bet on what he called an undervalued business. In an interview with CNBC last fall, he said: "I think it's a great newspaper, the best of the world. A great brand."
He explained his investment by saying: "It's not what you think. What's declining is the paper. Not the news. News, information, content — well, look at the success of Google. And I think The New York Times is doing a good job in the digital information area."
The Times Co. is trying to secure enough cash to pay off debts that start coming due in May. The company has a $400 million credit facility that expires then, followed by $100 million in bonds due in November. A further $250 million will come due in 2010, and a $400 million credit facility expires in 2011.
As of September, the company had only about $46 million in cash; its total debt load is $1.1 billion.
A spokesman for Slim could not be reached on Sunday. A spokeswoman for the Times Company declined to comment.
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