Humorous Interlude That Only Phil Falcone Will Appreciate

Well, maybe Scott Galloway too.

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NYT Redeeming 2010 Notes

NYT didn't even wait for the wire transfer from W.P. Carey to cool off before announcing moments ago that it would redeem its $250 million of 4.5% notes due 2010. In what can only be described as a building-for-debt exchange, Carlos Slim's U.S. newspaper has converted debt maturing 2010 with the debt backing the lease of its headquarters which matures anywhere between 2019 and 2024 but at double the interest rate. From the PR:

The New York Times Company announced today that it has called for redemption of all $250 million outstanding aggregate principal amount of its 4.5% notes due 2010. The notes will be redeemed, in accordance with their terms, at a redemption price equal to the present value of the principal and unpaid interest, plus accrued interest to the redemption date. The Company will use the proceeds from its recently completed sale-leaseback for a portion of the space that the Company owns in its New York headquarters to fund the redemption payment.

Based on TRACE at least one person saw the writing on the wall, and purchased over a million of the 4.5% bonds at noon today for a price of 90. As these notes have a make whole provision, they will likely end up being redeemed at a price well north of par, implying today's transaction made the purchaser a good 10% return in one day. We salute you, make-whole-bond-purchaser-with-excess-cash-from-sale-leaseback-transaction real man of trading genius. Sphere: Related Content

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NY Times Completes Sale Leaseback, Implies Class A NYC Lease Rates To Plummet

The struggling newspaper itself reports that the last attempt to extract value from its rapidly devaluaing assets has succeeded and W.P. Carey (as had been expected) has agreed to a $225 million 15 year (10 year early termination option) sale leaseback. Under the terms of the deal, NYT will pay Carey $24 million a year, or an annual rate of 10.7%. Curiously, based on the 750,000 square feet of space rented out, the implied lease rate is $32/sq foot which is roughly 50% lower than prevailing Class A office space leases of $50-80/sq foot, and is a harbinger of where office leases reprice once existing contracts expire, which will likely be a nightmare for commercial REITs who had short-term leases originated at the peak of the bubble (and of course all sorts of pain for CMBS). Sphere: Related Content

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NYT Hired Goldman To Sell Red Sox Stake, Posts Horrendous Revenues

The distressed semi-Mexican company announced today it has hired Goldman Sachs to sell its 17.75% stake in New England Sports Ventures, which owns the Boston Red Sox, Fenway Park, 80% of New England Sports Network, and 50% of a Nascar Team. Guess that sale leaseback must not be going all that well.

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In other news NYT posted December revenues which were, well, ugly

Ad revenues:
National media: -13.7%
Retail media: -13.3%
Classified media: -28.7%
Other ad revenue: -12.3%

About Group: -13.2%

Total Ad revenues: -15.7% Sphere: Related Content

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New York Times in Sale Leaseback Talks with W.P. Carey

In one of those nauseating mirror-in-a-mirror type of news events, NYT reports that the NYT is in advanced sale-leaseback talks with W.P. Carey. NYT did not disclose to the NYT how much W.P.Carey would pay, what the cost to repurchase is or what the rent cost would be. “Because we are in continuing discussions, we cannot comment on the status of the sale-leaseback,” Ms. Mathis, a spokesman for NYT said.

A little about the low profile W.P.Carey:

Founded in 1973 by William Polk Carey, W. P. Carey has its headquarters in Rockefeller Center in New York. It operates in 14 countries and arranges sale-leasebacks for a wide variety of industries. The company has about $10 billion in assets under management, about $2 billion of which is owned by its public company. The other $8 billion in assets are owned by W. P. Carey’s four real estate investment trusts and managed by the public company.

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Carlos Slim NYT 13/G Filed: Owns 16.21% Of New York Times Stock

According to the SEC filing, Carlos is now the proud owner of 25,754,000 shares of Class A NYT stock, or 16.21% of the outstanding stock. Sphere: Related Content

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New York Times: Rescue Financing 8-K Filed

Most interestingly among the negative covenants listed:

• Creating liens on any properties
• Incur additional debt prior to March 2010, if pro forma leverage is higher than 2.75x
• Engage in sale/leaseback transactions, with up to $225 million carveout for NYT HQ building
• Merge or consolidate with other assets
• Transfer or sell assets, with any sales over $10 million have to be used to pay down debt

There is also a 101% change of control put. Sphere: Related Content

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