A labor union representing newsroom employees at seven of
’s nine newspapers is demanding the removal from the board of three representatives of a hedge fund that has offered to buy the company and take it private.
In a letter sent to Tribune’s chairman,
the News Guild said that the hedge fund, Alden Global Capital LLC, had violated Securities and Exchange Commission rules by not informing shareholders of its buyout offer within the mandated 10 days after approaching the board.
The guild said that the three Alden-appointed directors—one of whom is the hedge fund’s co-founder,
—represented “gross violations of their fiduciary responsibilities” and that a special meeting should be called to vote on removing them.
A spokesman for Alden challenged the union’s interpretation of events and said the fund had abided by the rules.
“The union has its facts wrong and has reached numerous important and incorrect factual and legal conclusions,” the spokesman said. “The offer is in conformance with legal requirements and fiduciary duties.”
A spokesman for Tribune didn’t immediately respond to messages seeking comment.
On Thursday, Tribune said it had appointed a special committee made up of three independent board members to review Alden’s offer.
Alden holds a 32% stake in Tribune, whose properties include the
the New York Daily News and the Baltimore Sun. On Dec. 31, Alden said it was interested in acquiring the rest of the publishing company for $14.25 a share, valuing Tribune at $521 million. Tribune’s shares have since risen by 17% as of Tuesday morning.
Alden also controls MediaNews Group, which owns some 60 daily newspapers across the U.S., including the Denver Post, San Jose Mercury News and Orange County Register. The hedge fund has a reputation for making deep cost cuts at titles it acquires, which has triggered employee efforts at several Tribune papers to find local buyers to take over the publications individually, since Alden began amassing its stake in the company in late 2019.
The hedge fund gained control of three of Tribune’s seven board seats by agreeing not to buy more shares or make a hostile bid until at least June. The terms of the agreement limit Alden’s ability to maneuver in its buyout efforts, requiring board permission to negotiate. A deal would need the approval of the board and the support of shareholders holding at least 66% of the company’s stock.
In the Dec. 31 filing, Alden included a letter from Mr. Smith to the board detailing the hedge fund’s offer, which was dated Dec. 14. The letter mentioned that Alden had been in contact on Dec. 11 with outside investor
Stewart Bainum Jr.
, who expressed interest in certain Tribune properties, about the possibility of exploring a joint transaction with him.
The union argued that 20 days had passed since Alden first spoke with Mr. Bainum before the hedge fund made its filing informing other shareholders of its intention, and that 17 days had passed since it had contacted the board.
Write to Lukas I. Alpert at [email protected]
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