Mexican billionaire hands NY Times $250m lifeline
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The debt-laden New York Times received a much-needed lifeline in the form of a $250m loan from Mexican billionaire Carlos Slim. Forbes' second richest man in the world will have a chance to increase his stake in the company to 17%.
AFP - Mexican billionaire Carlos Slim on Monday agreed to provide the cash-strapped New York Times Company a 250-million-dollar loan to stave off mounting debts, the newspaper company said.
Slim will invest 250 million dollars in the form of six-year notes carrying a 14 percent interest rate, the New York Times reported on its website.
The loan from telecoms tycoon Slim, who already owns 6.9 percent of the Times Company, comes as the media powerhouse is struggling to meet approaching deadlines to pay back hundreds of millions of dollars in debt.
However, Slim, one of the wealthiest people in the world, will not be represented on the company's board, the Times said. Control will remain with the ruling Sulzberger family, the newspaper indicated.
"This agreement provides us with increased financial flexibility to continue to execute on our long-term strategy," Times Company chief executive Janet Robinson said in a statement.
"We continue to explore other financing initiatives and are focused on reducing our total debt through the cash we generate from our businesses and other decisive steps."
Most immediately, the Times company needs to refinance a 400-million-dollar credit line expiring in May.
The company has put up for sale its stake in the Boston Red Sox baseball team and said last year that it wants to raise up to 225 million dollars by borrowing against its Manhattan skyscraper headquarters.
The US newspaper industry is in freefall due to the recession's impact on advertising and the defection of both advertisers and readers to the Internet.
Advertising revenue for the New York Times Media Group, which also includes The International Herald Tribune, fell 21.2 percent in November last year compared to the same month in 2008.
The six-year notes in the deal with Slim are with warrants that are convertible into common shares, the company said. The 14 percent interest rate will have 11 percent paid in cash and three percent paid in additional bonds.
Slim, whose business interests also cover construction, banking, railroads and mining, is worth 60 billion dollars, according to Forbes Magazine.
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