Tribune Co. likely to go to creditors

CHICAGO, June 8 (UPI) -- A deal still in discussion in bankruptcy court would give lenders control of the Chicago Tribune, a source close the talks said.

Creditors including banks and investors hold $8.6 billion on senior debt, the Tribune reported Monday.

Chicago billionaire Sam Zell, who took the company private in 2007, holds a $90 million warrant that allows him to buy 40 percent of the company for $500 million. But that warrant would probably be canceled as part of the deal.

In addition, Zell loaned the company $250 million when it went private. That claim will be low on the list of priorities for the court to resolve, the newspaper said.

If creditors take over, it remains to be seen whether Zell and his management team will stay or go. The new owners could mandate changes. In addition, Zell and other mangers could choose to leave for their own reasons.

"It completely depends on whether the new owners see value in keeping Zell," Douglas Baird of the University of Chicago Law School said.

"They have to decide: Is the person at the helm when the company went into the storm the most able person to steer it out?" said Baird, who specializes in corporate reorganizations.